ABSTRACT
The term unemployment can be defined as an economics condition
marked by the fact that individual actively seeking jobs remain
unhired. Unemployment is expressed as a percentage of the total
available work force. The level of unemployment varies with
economics conditions and other circumstances. This is mostly seen in
graduate of various institutions of learning especially in under
developed nations like Nigeria. The study was designed to investigate
the impact of unemployment on economics growth in Nigeria of 41
years (1970-2010). 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. It focuses on this objective is toa determine the
relationship between unemployment and economic growth in Nigeria
(GDP). The method of analysis used in testing the hypothesis is the
hypothesis is the T-test, F-test etc. the major findings was 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.
vi
TABLE OF CONTENT
Title page i
Approval page ii
Dedication iii
Acknowledgement iv
Abstract v
Table of contents vi
CHAPTER ONE- INTRODUCTION
1.1 Background of the study 1
1.2 Statement of the problem 6
1.3 Research Question 10
1.4 Objective of the study 10
vii
1.5 Statement of hypothesis 11
1.6 Importance of the study 11
1.7 Scope and Limitation of the study 12
CHAPTER TWO
LITERATURE REVIEW
2.1 Theoretical literature 13
2.2 Unemployment and economic growth: Theoretical
framework 21
2.3 Empirical literature 23
CHAPTER THREE
3.0 Methodology 30
3.1 Model Specification 31
viii
3.2 Methods of Evaluation 32
3.2.1 Economic Theoretical Test 33
3.2.2 Statistical Critical 34
3.2.3 Econometric critical 36
3.3 Data required source, Transformation 36
CHAPTER FOUR
4.1 Presentation of regression result 38
4.2 Economic Apriori Criteria 40
4.3 Statistical Criteria (First Order Test) 42
4.3.1Coefficient of Multiple Determinants (R2
) 42
4.3.2 The student‟s T- test 42
4.3.3 F statistic 44
ix
4.4 Econometrics Criteria 46
4.4.1 Test for Autocorrelation 46
4.4.2 Normality Test for Residual 48
4.3.3 Test for Heteroscedasticity 49
4.4.4 Test for Multilcollinearity 51
CHAPTER FIVE
SUMMARYOF FINDING CONCLUTION AND RECOMMENDATION
5.1 Summary 53
5.2 Conclusion 54
5.3 Recommendation 57
Bibliography 60
Appendix
1
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Unemployment is generally agreed to be symptom of macroeconomic illness which could be “voluntary” or in “Voluntary”. When
is said voluntary I mean a condition where somebody chooses not to
work because they have a means of support other than employment
example is the idle rich man. On the other hand involuntary
unemployment exists when persons are willing to work at the
prevailing rate of pay but unable to find work. (Anyanwu 1995).
Balogun, ed et el (2003) also defined unemployed as the
percentage of the percentage of the labour force that is without job,
but is able and willing to work. In Nigeria however the ability and
willingness to work is not sufficient. It is necessary for the
unemployment to be registered with an employment bureau in order
to be recognized as unemployed. Yet, from an economic viewpoint,
2
the unregistered unemployed are part of the labour force and are,
therefore, technically unemployed. In Nigeria, unemployment data
are obtained through labour force sample surveys which ask if the
respondent has worked in the week preceding the survey. However,
the international labour organization (ILO), realizing the
shortcomings of the labour survey as it affects developing economies,
such as Nigeria, with a large informal sector, has encouraged a
review of the methodology to incorporate further disaggregation of
respondent responses to bring out the true rate of unemployment.
In order to establish the type of unemployment existing in an
economy, economists have classified unemployment as „frictional‟,
„seasonal‟ „structural‟ or cyclical‟.
1. Frictional Unemployment occurs when people are temporarily
out of work because they are changing jobs. This is
3
unavoidable in an economy in which both the labour force and
the jobs on offer are continually changing.
2. Seasonal unemployment is said to occur in a situation in which
people are laid off seasonally, due to the nature of the job they
do, e.gagriculture workers in developing countries may be laid
off during the growing season.
3. Structural unemployment is the unemployment that exists
when an economy is in full employment. Structural
unemployment occurs where employment in one or more
declining industries is falling.
It is as result of movement in the natural employment rate itself,
which can result from changes in labour market institutions,
demographic shifts etc. this situation is brought about by
economic variables, such as the level of aggregate demand and
the actual and/or expected real wage rate.
4
4. Cyclical unemployment occurs as result of fluctuations around
the natural employment rate, which can be attributed to
changes in aggregate demand.
Industrial relations refer to the process of conflict resolution, such
as collective bargaining, between employers and employees in the
course of fulfilling an employment contact. It could be achieved
either by conquest (when one party overwhelms the other), or by
mutual consent. The latter, preferred outcome is likely to result
from collective bargaining. Continuous industrial harmony is,
therefore, often the result of positive industrial relations.
In Nigeria, unemployment is regarded as one of the most
challenging economics problem facing the federal government.
Although, there are variations in the measurement of
unemployment, official estimates show their results as follows:
from 1985-2003, the data shows a highly fluctuation trend from
5
both the urban and rural sectors of the economy. From the data,
the 1985 figure shows the percentage of the national urban and
rural unemployment as follows: national 6.10%, urban 9.8%m
rural 5.2%and in year figure is as follows: national 3% urban
3.8% rural 2.7 %( CBN 2004).
The rising rate of the population of the country which is faster
than the job opportunities, a situation in which birth rate is rising,
death rate falling and the population growth rate is between 2.5%
and 3% unemployment is bound to exist. There had been also a
total neglect of the agricultural sectors and consequent mass
exodus of able bodied youths from the rural to urban areas in
search of the none existing while cooler jobs.
This further reduces employment in agriculture and puts
pressure on existing urban jobs (Anyanwu 1995)
6
1.2 STATEMENT OF THE PROBLEM
Unemployment has reached a very alarming proportion in
Nigeria, with a greater number of the unemployment being
primary and secondary school learners and university graduates.
This situation has recently been compounded by the increasing
unemployment of professionals such as bankers, engineers and
doctors. The toll is within the productive segment of the Nigeria
population (Vision 2010).
The extent of unemployment in Nigeria in is not justified by the
available financial statistics phenomenon. 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 harnesses the sharp disparity between
the official statistics on the phenomenon and the reality on ground
(Bello 2003). Disguised unemployment otherwise known as concealed
7
unemployment is a situation in which more people are available for
work than is shown in the unemployment statistics (Bannock et el
1998)
The problem of disguised unemployment is quite acute in
Nigeria. This explains why official unemployment statistics sharply
differs from the true state of employed or unofficial statistic
available. The recorded figure unemployment significantly
understates the number of people who are actually willing to work at
the existing set of wage rate. Consequently, the unemployment
figure in Nigeria is obtained through labour force sample survey, by
asking if the person has worked in the past week preceding the
survey.
Obviously, because even a graduate whohawks around respond
yes to the question, the unemployment rate will always be very low.
8
Unemployment is a situation of a labour not having enough
paid work or not doing work that makes full use of his skills and
ability. It can be measured by the numbers of hours worked per
week.
Generally in Nigeria, the official period of working time per
week is forty hours which manyworkers fall short of due to non –
availability of work. In some instance available work is rationed
especially among the low skilled and casual labours in the formal
sector tends to be worse (Bello 2003) therefore the major problem
we have in Nigeria is the distinguished unemployment form. The
official figures of the rate of unemployment form.
December1998, a total of 66.3% of male and 62.0% of female
unemployment were recorded at the urban centres while rural
centreshad an estimate of 47.1% and 45%male and female job
seekers respectively. As at December 1999, school levers
9
unemployment rate had raised to 67.0% for males and 68.8% for
females in the urban centres while the rural centres was as high as
59.1 and 55.7%. For male and female respectively (Bello 2003).For
polytechnic and university graduates, the figures shows relatively low
unemployment rate as compared to the school leavers experience.
For instance, during the period under investigation a peak of 14.0%
rate of unemployment was recorded for polytechnic female graduate
in 1998 which the male graduate records had its peak in 1999 with
15.0% point in urban areas (Bello 2003). The graduate
unemployment rate in the urban centres had 8.5 per cent record high
in September 1999 for males and 4.5%in June 1999for female during
the periods (Bello 2003).
Many people are frustrated by lack of unemployment‟s
opportunities they include these without work and those who have
jobs but want to work longer hours or more intensively. A
10
considerable size of utilized and underutilized labour abounds in
Nigeria and which ought to be brought into the circle. These shows
that Nigeria‟s employment problem has become chronic and should
be a matter of utmost national concern.
1.3 RESEARCH QUESTION
From the above discussions the research question is:
Has unemployment had any impact on Nigeria economy?
1.4 OBJECTIVE OF THE STUDY
The objectives that will guide this study are as follows;
1. To determine the relationship between unemployment and
economic growth in Nigeria.
2. To ascertain the magnitude of this relationship.
3. To make policy recommendations based on the finding.
11
1.5 STATEMENT OF HYPOTHESIS
The hypothesis that would guide this work is as follows;
1. H0: Unemployment has no significant impact on economic
growth in Nigeria.
2. H1: Unemployment has no significant impact on the economic
growth in Nigeria.
1.6 IMPORTANCE OF THE STUDY
One of the macroeconomics goals of any country is the
actualization of full employment. Therefore, unemployment in any
system is seen as a policy failure and there is always concerted effort
on the part of the government in checkmating the impact of
unemployment in an economy. The study of unemployment is
important to the policy makers, politicians, and student of economics.
12
To the policy makers ascertaining the rate of unemployment, in
an economy to the desired height, the policy maker with the
knowledge of the state of unemployment in the system stands the
best chance of controlling it through appropriate initiative like poverty
eradication programmes and creation of employment opportunities
that touches the lives of the population.
1.7 SCOPE AND LIMITATION OF THE STUDY
The limitation of this research were much and varying.
First was the 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 finance and 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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