Revisiting the Determinants of Unemployment in Nigeria: Do Resource Dependence and Financial Development Matter?

Abstract

The paper examines the determinants of unemployment in Nigeria from 1981 to 2013, using the error correction model (ECM), and with ordinary least squares (OLS) method for robustness check. Results from the short-run and long-run regressions show that resource dependence and growth in private credit/GDP by banks significantly worsen labour unemployment, suggesting likely effects of resource-curse, high cost of financial intermediation cum limited credit to the real economy. Real GDP per capita, FDI, trade openness and exchange rate depreciation significantly reduce labour unemployment in Nigeria, whereas increasing industrial capacity usage intensifies it. Government capital expenditure aggravates unemployment in both estimated models, though not significantly, showing rent-seeking and prolonged deficit-financing. Inflation had a mixed outcome and was not significant in both short-run and long-run estimation. Key policy implications of the study include the need to efficiently manage our natural resources; deepen the domestic financial sector; enhance fiscal discipline; promote a favourable macroeconomic environment to attract the right kind of real-sector investment; and raising the economy's competitiveness in labour-intensive processes.

Revisiting the trade and unemployment nexus: Empirical evidence from the Nigerian economy

“…Furthermore, some studies have also focused on investigating the determinants of unemployment within the context of the Nigerian economy for instance; Orji, Orji‐Anthony, and Okafor () investigated the unemployment inflation relationship in Nigeria and obtained a significant positive relationship among these two variables. In a different study, Ogbeide, Kanwanye, and Kadiri () while examining the determinants of unemployment in Nigeria applied the error correction term (ECM) approach and concluded that factors like resource dependence and high cost of financial intermediation exacerbate labor unemployment in the country. Considering the size of the Nigerian economy and the current unemployment challenges that are facing the nation despite being a potential trade hub among the sub‐Saharan African countries and in Africa at large, redressing the unemployment crisis within the trade discourse is particularly relevant.…”

How Does Government Spending Affect Labour Force Participation and Unemployment Within the WAMZ Countries?

“…The empirical methodology adopted in this study is similar to those of O'Nwachukwu (2017) and Ogbeide et al (2016). However, the contributions of this paper are different from those of these studies.…”

Corporate Political Strategies in Weak Institutional Environments: A Break from Conventions

“…Fisman 2001;Sun et al 2011), it differs in the sense that it also involves recruiting people from target politicians' constituencies. In emerging countries such as Nigeria, unemployment is high (Ogbeide et al 2016) and its reduction is a constant promise politicians make on their campaign trails. Additionally, most Nigerian youth have very poor perceptions of blue-collar jobs (Dike 2010); hence, they prefer white-collar positions such as bank work, which is highly regarded and prestigious.…”