ABSTRACT
The term unemployment can be defined as an economic condition marked by the fact that
individuals actively seeking jobs remain unemployed. Unemployment is expressed as a
percentage of the total available work force not working. The rate of unemployment varies with
economics conditions and other circumstances. Unemployment is frequently seen in graduates of
big institutions of learning most especially in under developed nations such as Nigeria. The study
was formed to investigate the effect of unemployment on economic growth in Nigeria. The
research focuses on determining the cause and impacts of unemployment, and how the problem
of unemployment in Nigeria will be reduced to a minimal level or even eradicated. Its focus on
this objective is to determine the relationship between unemployment and economic growth in
Nigeria (GDP). The method of analysis used in testing the hypothesis is the T-test, F-test etc.
The major findings were that unemployment has a negative impact on the gross domestic product
(GDP) of the Nigeria economy. Some suggestions and policy recommendations were made
based on the findings.
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TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1.GENERAL BACKGROUND OF UNEMPLOYMENT
1.2.PEOPLE ASSOCIATED WITH THE SUBJECT MATTER
1.3.THE PROBLEM OF HOW TO RESTRAIN RURAL AND URBAN MIGRATION
1.4.THE IMPORTANCE OF STUDYING THE AREA
CHAPTER TWO: LITERATURE REVIEW
2.1. THEORETICAL LITERATURE
2.2. THE CLASSICAL THEORY OF UNEMPLOYMENT
2.3. KEYNESIAN THEORY OF UNEMPLOYMENT
2.4. THE RELATIONSHIP BETWEEN ECONOMIC GROWTH AND UNEMPLOYMENT
CHAPTER THREE: METHODOLOGY
3.1. THE MODEL
3.2. MODEL SPECIFICATION
3.3. ESTIMATION TECHNIQUES AND RESULT VALIDATION
3.3.1. THE ECONOMIC CRITERIA
3.3.2. THE STATISTICAL CRITERIA
3.3.3. ECONOMETRIC TESTS
3.4. NATURE AND SOURCES OF DATA
CHAPTER FOUR: DATA PRESENTATION AND INTERPRETATION OF RESULTS
4.1. PRESENTATION OF RESULTS
4.2. INTERPRETATION OF RESULTS
4.2.1 ANALYSIS OF REGRESSION COEFFICIENTS
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4.2.2. EVALUATION BASED ON ECONOMIC PRIOR EXPECTATIONS
4.2.3. EVALUATION BASED ON STATISTICAL CRITERIA
4.2.4. EVALUATION BASED ON ECONOMETRIC CRITERIA
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND POLICY
RECOMMENDATIONS.
5.1. SUMMARY OF FINDINGS
5.2. CONCLUSION
5.3. POLICY RECOMMENDATIONS
REFERENCES
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CHAPTER ONE
INTRODUCTION
1.1 GENERAL BACKGROUND OF UNEMPLOYMENT
In accordance to the advanced learner dictionary, Unemployment is defined as the amount of
Labor unused. But according to the World Bank (1998) unemployment is defined as the number
of the economically active population who are without work but available for and seeking work,
Including people who have lost their jobs and also those who have voluntarily left work. When a
factor of production is not engaged in any job it is known to be unemployed. In this paper I am
focusing mainly on the economic effect of unemployment in the Nigerian economy. I will be
focusing mainly on labor which is known to be the most important and active factor of
production which explains that without labor every other factor will not be practiced. All the
other factors are regarded as passive factors of production.
Unemployment is a demanding phenomenon to an industrialized economic system. There is
little unemployment in Nigeria involved in the primary output production, most of these
communities still endure a huge reduction in their output, due to fall in the world market. We
regularly advocate industrialization as an absolution to unemployment problem but it is highly
vital to be aware that industrialization leads to an alarming issue known as unemployment in
industrial progress.
1.2 PEOPLE ASSOCIATED WITH THE SUBJECT MATTER
Anyacle (1995:214) pointed out that the issue has become frequently without solution in
perception, it has established itself to be one of the greatest adversary of the population in this
section of the world. The issue of unemployment has aggravated due to proceeding and dearth
unbridle rural-urban migrate, etc.
Unemployment is a huge issue affiliated with rural and urban areas of the Nigeria economy
which results in the following problems in Nigeria.
A) Poverty: When there is no source of income, poverty creeps in. the quality of life and
standard of living is reduced due unemployment.
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B) Increase in Crime Rate: When individuals are idle as a result of no job, he or she is likely
to engage in criminal activities in other to satisfy their financial needs such as, arm robbery,
prostitution, drug dealing, etc.
C) It causes migration: This is a situation where people move from one area to another for
better quality of life. In a rural area where there is high unemployment and no social amenities
people will move from that area to an area with high employment and improved social amenities.
D) Frustration: Unemployment can cause frustration and depression on the population, most
people can hold on so they commit suicide because of the agony they go through staying
unemployed.
E) Poor Education: Unemployment effects the population in the area of education. Parents are
not able to pay for books or enroll their kids in school because they can’t afford it and as a result
children are roaming around the streets idle causing nuisance.
F) Increase in death rate: As a result of unemployment, there is increase in death rate because
people start dying as a result of malnutrition and inability to pay for hospital bills.
1.3 THE PROBLEM OF HOW TO RESTRAIN RURAL- URBAN MIGRATION.
Rural-urban Migration is the movement of people from one suburb or Villages to Cities or
Towns. This rural-urban is a feedback to some of the current conditions from the rural
communities to urban communities as diversified logic. The elements of this rural-urban
migration are known as the push and pull factors. Pull factors are those factors within an urban
area that attracts people in the rural areas to move to the urban areas while the push factors are
the reasons why people move from the rural areas to the urban areas. These push and pull factors
including the following.
Insecurity: People move away from places that experience terrorism, violence and high rate of
criminal activities. They move in search of a peaceful and well secured environment.
Scarcity of Land: People are forced to migrate in search of more fertile land for cultivation and
to live in, less populated areas are more conducive for those undertaking extensive agricultural
move.
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1.4 THE IMPORTANCE OF STUDYING THE AREA
(RURAL – URBAN MIGRATION)
The main concern of studying this rural – urban migration is to help cut down the number of
people that will move out of the suburb or the villages to cities or towns. To restrain this mass
movement of people from rural-urban areas, the following should be done by the federal
government of Nigeria.
i) Industries should be established in rural areas.
ii) Social amenities should be provided to prevent the push and pull factors.
iii) The Agricultural system should be upgraded
iv) Higher Institutions should be established in the rural Areas.
The issue of unemployment to the Nigeria economy is to determine concrete solutions to it
(unemployment). The Federal government of Nigeria should endorse the following measures to
eliminate this particular problem.
A) More job opportunities should be created to cut down the high rate of unemployment.
When people are given the opportunity to earn a living, the problems of crime and prostitution
will reduce.
B) Investment into education so that people can be taught self-belief and good quality of life
C) Development of the agricultural sector, which will generate revenue for the government
and employment, will be available to some citizens.
D) Reduction in tax rate which will yield high productivity and a rise in employment.
1.5 DEFINITION OF THE TYPES OF UNEMPLOYMENT.
In this section all the types of unemployment in the Nigeria economy are explained briefly,
they are as follows: –
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A) FRICTIONAL UNEMPLOYMENT: –
This is also known as a search unemployment which occurs when workers lose their current
job and are in the course of seeking for another one. One important thing to do in other to reduce
this type of unemployment is to provide better information about the job to workers.
B) SEASONAL UNEMPLOYMENT:
This type of unemployment occurs because some jobs only function at certain times of the
year and also some industries only produce and distribute their products at certain times of the
year. Example; road construction companies where during the raining season there no jobs.
C) STRUCTURAL UNEMPLOYMENT:
This type of unemployment occurs when some industries take a downturn due to long-term
changes in the market conditions. This type of unemployment exists during recession and
globalization.
D) VOLUNTARY UNEMPLOYMENT
This type of unemployment occurs when workers choose not to work at a current
equilibrium wage rate for certain reasons, for example; when a husband tells his wife not to
take any job but stay at home as a full time house wife.
E) DEFICIENT DEMAND (CYCLICAL) UNEMPLOYMENT:
This is also known as Keynesian unemployment, which occurs when there is a fall in the
aggregate demand, which results to a fall in prices. This affects some industries and it may
cause workers to be laid off.
G) UNDER EMPLOYMENT: –
This type of unemployment occurs when a worker is paid less than his worth or efforts put
into a job. Example; a graduate who is working as a cleaner.
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