Investigating the relationship between changes in oil prices and unemployment rate in Nigeria: linear and nonlinear autoregressive distributed lag approaches

Abstract

The increasing unemployment in Nigeria has motivated several empirical studies on the causes of the problem in the country. However, attention has not been paid to the contribution of the changes in oil prices to the unemployment problem. As a net exporting oil country, a fluctuation in oil prices in the international market can have impact on economic growth and employment. In the light of this, we investigate the effect of changes in oil prices on unemployment rate in Nigeria, using real oil prices of Brent and West Texas International with linear and nonlinear autoregressive distributed lag (NARDL) estimation methods. Findings from linear ARDL show that changes in oil prices have little or no significant effects on unemployment rate. The NARDL results indicate that an increase and a decrease in oil prices have an insignificant positive effect on unemployment in the short run. However, in the long run, an increase in oil prices worsens unemployment situation, while a decrease has insignificant reducing effect. We also find evidence of a long-run asymmetric relationship between oil prices and unemployment. The need for government to invest oil revenues in generating more electricity or in providing alternative sources of energy with the objective to reduce the costs of production of firms is recommended.

The Role of Institutional Quality in Oil Price-Unemployment Nexus in African and Asian Oil-Exporting Countries

“…Similar findings were documented by Kocaarslan, et al, (2020) for the US and Nusair (2020) for the US and Canada, Ordóñez, Monfort and Cuestas (2019) for Spain. Surprisingly, the same results were found by Cheratian, et al, (2019) for oil-exporting countries of MENA and Raifu, Aminu and Folawewo (2020) for Nigeria. This looks puzzling considering the theoretical argument as regards the relationship between oil price and the economy in oil-exporting countries and oil-importing countries.…”

“…As a result of the nonzero profit condition in the product market, the workers must accept the lower wages for unemployment to rise. For a detailed derivation of this model and its extension see Bocklet and Baek, (2017) and Raifu, et al (2020). In this section, we present only the estimation technique models used for the analysis.…”

“…This study examines the role of institutional quality in oil price-unemployment nexus in oilexporting countries comprise of African and Asian countries. The motivation for this study emanates from the recent empirical findings documented from the studies that examined the effect of oil price shocks on unemployment in both oil-exporting and oil-importing countries (see Alkhateeb, et al 2017;Bocklet and Baek, 2017;Cuestas and Gil-Alana, 2018;Cuestas and Ordóñez 2018;Karaki;2018, Cheratian, Farzanegan andGoltabar, 2019;Kisswani and Kisswani, 2019;Ordóñez, Monfort and Cuestas, 2019;Kocaarslan, Soytas and Soytas, 2020;Nusair, 2020;Raifu, Aminu and Folawewo, 2020). All these studies, irrespective of whether it is conducted for oil-exporting or oil-importing countries, concluded that oil price shocks have a positive effect on unemployment.…”

Curriculum Restructuring and Job Creation Among Nigerian Graduates: The Mediating Role of Emerging Internet Applications

“…Some also tend to be underemployed as jobs that fitted their qualifications were not readily available. This observation tends to corroborate other studies that continually report underemployment among graduates worldwide (Jackson & Li, 2021;Ndiuini & Baum, 2021;Petreski et al, 2021;Searle, 2019), in developing nations (Kanwal et al, 2020;Ngwenya et al, 2020;Usoro et al, 2021) and Nigeria in particular (Agu et al, 2020;Angioha et al, 2018;Nwajiuba et al, 2020;Raifu et al, 2020).…”

Effect of military spending on private investment in Nigeria: does a crowding-out effect exist?

“…The issue of insecurity has become complicated as there are currently rises in the activities of bandits, kidnappers, herders-farmers conflicts and the host of others. It is also observed that military spending is subject occasional fluctuations due to the instability of crude oil prices(Raifu and Raheem, 2018;Aminu and Raifu, 2019, Raifu, Aminu and Folawewo, 2020Raifu, 2021) 2 https://www.cfr.org/global-conflict-tracker/conflict/boko-haram-nigeria…”