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Unemployment is a situation in which an individual is looking for job but cannot find one either in private or public sectors of the economy. Based on this, the research was conducted to investigate the determinant effect of unemployment on economic growth in Nigeria, from the periods of 1981 through 2014. Using ordinary least square for analysis, other tests were carried out such as unit root test, error correction test, heteroskdasticity test, serial correlation etc. the researcher also looked at the types of unemployment in Nigeria, some of which include underemployment, disguised unemployment etc. the researcher also focuses his attention on reviewing related literatures and theory particularly Keynesian theory of unemployment. The major findings was that unemployment has a negative impact on the gross domestic product (GDP) of the Nigeria economy and that entrepreneurship education policy of the government has a positive and significant effect to the growth rate of Nigeria gross domestic product. Some suggestions and policy recommendations were made based on the findings.







1.1 Background of the study

Unemployment is a situation in which an individual in an economy is looking for job and cannot find one. According to international labor organization (2012), unemployment occurs when people are without work and actively seeking for job. Unemployment is a global issue that affects developed, developing and under-developed nations of the world.

Unemployment is generally agreed to be symptom of macro-economic problem and could be “voluntary” or “involuntary”. It is said to be voluntary where somebody chooses not to work because they have means of support other than paid employment for example an idle rich man. On the other hand involuntary unemployment exists when persons who are willing to work at the prevailing rate of pay are unable to find work (Anyanwu 1995). Furthermore, Balogun et al (2003) defined unemployment as the percentage of the labor force that is without job

One of the Macroeconomic goals is to maintain full employment, so any country with low economic growth is often characterized by very low capacity utilization, low standard of living, lack  of social progress and high rate of unemployment.

As a way of reducing the rate of unemployment in Nigeria, especially graduates’ unemployment, the government introduced a policy on Entrepreneurial education. Hence  Entrepreneurial education is regarded as a natural fit for Business education departments of higher institution in Nigeria as most of the departments integrates the functional areas of business, accounting, finance, marketing, management, the legal and economic potentialities in which a new venture operates in a bid to reduce unemployment. It is therefore, important for these categories of students educated in these fields to think like an entrepreneur since they are expected to start their own businesses after graduation or work closely with entrepreneurs (Griffin and Hammis, 2003).

Ogundele (2007) viewed the idea of entrepreneurship as a multidimensional phenomenon. It was found that the processes of emergence, behavior and performance of indigenous entrepreneurs were separately and in combinations affected not by a single but multiple factors, in ranging degrees. These factors included economic, socio-cultural, ecological, managerial, educational developmental, experiential, technological, structural, ethical and innovative issues. He concluded that any policy designed to change entrepreneurship scenario in Nigeria will require multiple and simultaneous approaches in the development of necessary changes in the behavior of indigenous entrepreneurs. Akeredolu-Ale (1975) examined the origin and performance of indigenous entrepreneurs. He identified 2 broad categories of factors that affected entrepreneurs. These were the environmental factors and the personal level factors. His conclusion was that the problems that were confronting the indigenous entrepreneurs in Nigeria could only be partly explained by the economic factors.

Therefore, this study will examine entrepreneurial education as a tool for unemployment reduction in Nigeria, where Entrepreneurial education is the incorporation into the students syllabus steps involved in starting a new business based on a recognized business opportunity as well as operating and maintaining that business. The belief of some people is that entrepreneurship education does not need to be taught and therefore, an entrepreneur is born to be so. It should however be noted that for one to be a successful entrepreneur, he/she needs to learn the skills (Griffin and Hammis, 2003). Fadayomi (1992) found out that one of the causes of unemployment is inability to utilize the nations manpower resources effectively especially in rural areas. This research also, seek to investigate the effect of unemployment on economic growth in Nigeria and attempts will be made towards perspective policy increase to reduce the predicament of unemployment and enhance growth which will help attend rapid economic development in Nigeria(Njoku et al, 2011)


1.2 Statement of Problem

Today over 30 million Nigerians are said to be unemployed, despite the efforts made by government through National Directorate of Employment (NDE) and National Economic Reconstruction Fund (NERFUND) (Chudi-oji, 2013).Taking a view on the report of the Federal office of statistic (2010), the composite unemployment growth rate of the Country in 1997 was 13.2 percent with urban unemployment growing at six percent. The public sector report on unemployment has been so bad in the last four years following the retrenchment in the ministries with about 30, 000 persons let off in order to enable the federal government pay the minimum wages. This is added to the thousand thrown into the labor market by blue- chip companies in the private sector (Chudi-oji, 2013)

There have been several attempts to solve the problem through institutions like national directorate of employment (NDE), Better life for rural women and others, which have failed. Last four years the federal governments in an attempt to create more employment opportunities adopted real sector policies aimed at stimulating output growth, alleviating poverty and reducing unemployment through private sector participation in the economy. The indication is the problem of unemployment is on the increase. Thus, the project is interested in why the efforts of successive administration failed to solve this problem? All these have engaged the attention of experts in human capital development.

According to Durosinmi (2012) over the years one of the greatest challenges facing Nigerian economy, which has maintained a rising trend, is unemployment. The total labor force in Nigeria is made up of all persons aged 15-64 years excluding students, home keepers, retired persons, and stay-at-home to work or not interested , and Nigeria government from the past to the present have made serious efforts towards the eradication of this problem but it seems to be worsening. Unemployment has reached a very alarming proportion in Nigeria with a greater number of the unemployment being secondary school leavers and university graduates (Durosinmi 2012). This situation has recently been compounded by the increasing unemployment of professionals such as bankers, Engineers and doctors.  The extent of unemployment in Nigeria is not justified by the available financial statistics; this is because of the nature of unemployment in the country where many job seekers do not see the need for registration as unemployed due to expression of futility in such exercise. This shows a sharp disparity between the official statistics on the phenomenon and the reality on ground (Bello 2013).

Unemployment problem in Nigeria has different dimensions. There are underemployment cases in which people receive incomes that are inadequate to support their basic needs, in terms of food, clothing and shelter. There are also cases of disguised unemployment where people take up jobs that are below their educational attainment and experience. The problem is that of people seeking for job opportunities but who cannot find any either in the public or the private sector. Some people are willing and ready to set up enterprises themselves and engage in one type of economic activity or the other but are constrained by the prevailing poor macroeconomic environment such as price instability, insecurity, etc. All these have contributed significantly to the high level of unemployment and poverty in Africa (Oni, 2006).

As a way of reducing the high rate of unemployment in Nigeria especially graduates unemployment the government introduced a policy on entrepreneurial education. Hence Entrepreneurship skills acquired through entrepreneurial education has been recognized as an important aspect of organization and economies (Dickson et al, 2008). Schumpeter (1934) argued that entrepreneurial education is very significant to the growth and development of economies. Having understood the vital role of entrepreneurship in economic development, it become apparent that careful attention is needed to invest and promote entrepreneurship. Meanwhile, education is seen as one of the precondition for entrepreneurship development particularly in a place where the spirit and culture is very minimal. It is said to be an important determinant of selection into entrepreneurship, formation of new venture and entrepreneurial success (Dickson et al, 2008). However, it equally assumes here that there is a positive relationship between education and individual’s choice to become an entrepreneur as well as the result and outcome of his or her entrepreneurial activity. The move toward poverty reduction should not be considered and treated in isolation, different approach and strategies need to be employed. For any country to foster genuine economic growth and development, its education system must be considered as basis and essential ingredient. Education is undisputedly considered as the bedrock of any meaningful development (FGN, 2004 in Akpomi2009), be it economic, social or political.  Adejimola and Olufunmilayo (2009) reported that about 80% of the graduates find it difficult to get employment every year. However, entrepreneurial education can bridge the gap by equipping the undergraduates in becoming a successful entrepreneur thereby reducing the rate of unemployment in Nigeria.

Thus the study seeks to answer the following questions

(i) What are the effects of unemployment on economic growth of Nigeria?

(ii) How effective is Entrepreneurship education to impact on unemployment – growth relationship in Nigeria?



1.3 Objectives of the Study

The broad objective of this research work is to analyze the effects of unemployment on economic growth in Nigeria

This will be achieved through specific objectives below.

(i) To determine the effect of unemployment on economic growth in Nigeria.

(ii) To find out if entrepreneurial education has any impact on unemployment-growth relationship in Nigeria.

1.4 Research Hypothesis

Based on the above stated research objectives, conclusion will be drown from the following research hypothesis.

(i) H0: There is no significant effect of unemployment on economic growth in Nigeria

H1: There is significant effect of unemployment on economic growth in Nigeria.

(ii) H0: Entrepreneurial education has no significant impact on unemployment –             growth relationship

H1: Entrepreneurial education has a significant impact on unemployment –          growth relationship


1.5 Significance of the Study

The study of unemployment is important to the policy makers, politicians, and students of economics. To the policy makers ascertaining the rate of unemployment in an economy to a desired level, the policy makers with the knowledge of the state of unemployment in the system stands the best chance of controlling it through appropriate initiative like poverty eradication programs, creation of employment opportunities that touches the lives of the population and entrepreneurial education provided in the higher institution syllabus to prepared the students for future employment challenges.

1.6 Scope and Limitation of the Study    

This research will be restricted to the Nigerian economy as it relates to unemployment rate in the country from 1981 – 2014, and also focus on Entrepreneurial education which started in the year 2011.

My First constraint was difficulty in getting access to some relevant research documents. There were several cases of limited copies of materials.

The second constraint to this research was time. The time allowed for the completion of this work was short, coupled with the fact that other academic work were in progress.


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