Factors Mediating Between Government Expenditure and Unemployment in Nigeria

Abstract

The study seeks to find economic variables mediating between unemployment and government expenditure in Nigeria. The indirect effect was tested using the method of difference of coefficient. the findings shoe that only labour force population and inflation showed evidence of partial mediation, although their mediational (indirect) effect are not statistically significant as the P-values of the test of indirect effect are all greater than the level of significance, 0.05. Further studies are recommended to ascertain factors mediating upon government expenditure and unemployment in Nigeria other than economic variables already studied.

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“…Hence, it can be concluded that this research's findings can help us understand that FDI cannot influence unemployment rate directly; however, after it is mediated by economic growth and provincial wage rate, FDI can influence the unemployment rate in Indonesian labor market. These findings are in line with the previous studies (Badr and Ayed, 2015;Çelebi et al, 2015;Mahmood, 2015;Nordin et al, 2015;Nwankwo & Igweze, 2016).…”

“…Employing threshold estimation method to analyze samples from 1980 to 2012 on Malaysia economy, they concluded that to certain levels, economic freedom plays important role in mediating FDI and economic growth in Malaysia. Nwankwo and Igweze (2016) combined an increase of workforce population and high inflation rate and found that they could mediate government expenditure and unemployment in Nigeria. All studies above try to explore whether relationship between independent and dependent variables will be different if the third variable is added as a mediator.…”

“…Moreover, FDI showed indirect effect on TPT, yet it was not transmitted through M, as shown in Figure 1. Meanwhile, the size and significance of these variables' coefficients would determine the nature of mediation and it could be explained by structural equation 1-6 (Nwankwo & Igweze, 2016).…”

“…Shrout & Bolger (2002) and stated that mediation happens when the causal effects of some X variables on Y results can be explained by M as mediating variable. Studies on the influences of mediating variables in economy were conducted by Badr and Ayed, 2015;Çelebi et al, 2015;Mahmood, 2015;Nordin et al, 2015;Nwankwo & Igweze, 2016. Based on the explanation above, the further objective of this research is to determine what kind of mediating variable will be found; and whether the mediator fully or partially mediate the relationship in this research.…”