The Impact of Remittance on Economic Growth and Unemployment in Nigeria, An Application Ardl Model

Abstract

Remittances play an increasingly important role in the economics of many nations, contributing to economic growth and the well-being of less fortunate individuals, so that This study investigates the impact of remittance on economic growth and unemployment in Nigeria. In this study, all the data was collected from World Bank. And the paper is the secondary data together with an annual data from 1991 to 2020 for Nigeria which were used in this analysis. According to the review of the relevant literature, several studies have been used in Autoregressive Distributed Lag (ARDL) to determine the connection between variables. In this study, we analysed the data using the same model. We adopted the Autoregressive Distributed Lag (ARDL) model to determine the connection between the variables in this study. In this paper, we concluded that the unemployment of the explanatory variable has a negative and significant impact on economic growth at 1% significance in the long run. In comparison, the interaction effect of the remittance and unemployment has a positive and insignificant influence on economic growth at a 1% significance level in the long run. Also, there is insignificance and negative effect of Government expenditure on the economic growth in Nigeria. In contrast, the labor force has a negative and significant impact on dependent variables. The blue line in the stability test does not cross the boundary, indicating that the coefficient is stable at 5% based on the CUSUM test. We found that the interaction effect of remittance and unemployment has a positive and insignificant impact on economic growth at a 1% level of significance in the long run, which means that if the interaction of unemployment and remittance increases by 1 percent then economic growth will increase by 11% in the long run.