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The Effect of Unemployment on Economic Growth in Nigeria.

 Format: MS WORD   Chapters: 1-5

 Pages: 68   Attributes: COMPREHENSIVE RESEARCH

 Amount: 3,000

 Feb 19, 2020 |  11:00 pm |  1394



1.1    Background to the Study.

One of the challenges facing the Nigerian economy is unemployment which has been the source over the years. The unemployment rate is vital in any economy as it is one of the determinants of economic growth and development in developed and developing nations. Thus, Government strives to achieve and to maintain full-employment. Unemployment is a situation whereby people who are physically fit, capable, qualified and ready to work at any time are without jobs. The issue of unemployment is one of the macro economic problems of a nation. Currently, in developing countries, the problem of unemployment has been increasing as a result of different economic problems facing most countries. The issue of unemployment in Nigeria is highly different compared to other nations. Feridun and Akindele (2006) identified unemployment as one of the major challenges confronting the Nigerian economy. The total labour force in Nigeria is made up of all persons aged 15-64 years excluding students, home keepers, retired persons and stay-at- home to work or not interested persons. In Nigeria, unemployment is regarded as one of the most challenging economics problem facing the federal government.

The problem of unemployment has been of great concern to economists and policy makers in Nigeria since the early 1980s. The effect of financial crisis on public and private sectors has led to renew attention on the phenomenon. It is a widely accepted view in economics that the growth rate of the Gross Domestic Product (GDP) of an economy increases employment and reduces unemployment. The three most significant elements for the economy overall are productivity, income distribution and unemployment. This theoretical proposition relating output and unemployment has been proposed by Okun (1962). This relationship is among the most famous in macroeconomics theory and has been found to hold for several countries and regions mainly in developed countries (Christopoulos, 2004; Daniels and Ejara, 2009).

Okun’s (1962) postulates a negative relationship between movements of the unemployment rate and the real gross domestic product (GDP) by focusing on the empirical relationship between unemployment and GDP variations. He emphasised that as a result of changes in aggregate demand, industry changes their production pattern which leads to changes in demand for labour which alter the unemployment rates. Unemployment problem in Nigeria has different dimensions. There are underemployment cases in which people receive incomes that are inadequate to support their basic needs, in terms of food, clothing and shelter. There are also cases of disguised unemployment where people take up jobs that are below their educational attainment and experience. The worst case of all is that of people seeking for job opportunities but who cannot find any either in the public or the private sector. Some people are willing and ready to set up enterprises themselves and engage in one type of economic activity or the other but are constrained by the prevailing poor macroeconomic environment. All these have contributed significantly to the high level of unemployment and poverty in Africa (Oni, 2006).

Another dimension of unemployment problem in Africa is the differentials in its manifestation by sector, sex and educational level. For instance, in Nigeria, available data from National Bureau of Statistics show that as the incidence of poverty is higher in rural than urban areas, so also is the rate of unemployment, particularly in the late 1990s and 2000s. The incidence of poverty is higher in Nigeria among those who have little or no education than the other categories. In the same vein, the proportion of employment persons with little or no education is higher than all other categories of people with different levels of education. The objective of this study is to examine the impact of unemployment on the Nigerian Economic growth and to proffer recommendations on how this problem can be tackled by the government.



Unemployment is one of the developmental problems that face every developing economy in the 21st century. International statistics show that industrial and service workers living in developing regions account for about some percentage of the unemployed (Patterson et al 2006). According to Bello (2003), the problem of unemployment has always been an issue of great concern to economists, policy makers and economic managers alike; given the devastating effect on individuals, the society and the economy at large.


A  look at the unemployment and economic growth trend of Nigeria shows that high unemployment hinders growth. The government, however, has employed different policy measures to combat unemployment in order to encourage growth. They range from increases in government expenditure, giving industrialists tax holiday to encourage industrialization and even the use of monetary policy instruments such as reducing commercial bank lending rate to encourage investment through borrowing. Recently, the idea of self- employment (Entrepreneurship) is gaining popularity. This, the government encourages by giving young entrepreneurs funds to start up their own business. Despite all these efforts, unemployment continues to be on the increase and hinders growth.



 The related study aimed at answering the following questions.

  1. Is there any relationship between unemployment and economic growth in Nigeria?
  2. What is the trend of unemployment and economic growth in Nigeria?
  3. What are the factors affecting unemployment and economic growth in Nigeria?


The main objective of this study is to:

  1. To study the relationship between unemployment and economic growth in Nigeria.
  2. To examine the trend in unemployment and economic growth in Nigeria.
  3. To discuss the factors affecting unemployment and economic growth in Nigeria.


1.5 Statement of Research Hypothesis. 

The hypothesis that would guide this work is Null hypothesis against Alternative hypothesis as follows:

(H0): Unemployment has no significant impact on Economic growth in Nigeria.
(H1): Unemployment has significant impact on the Economic growth in Nigeria.


1.6 Significant of the Study.

The significance of this study is to know the impact of unemployment on economic growth in Nigeria. The macroeconomic goals of any economy is the actualisation of full employment. Therefore,unemployment in any system is seen as a policy failure and there is always a concerted effort on the part of the government in check mating the impact of unemployment in an economy. Thus, the result of this study will provide useful information needed by the government to fight unemployment and creates employment opportunities in the Nigeria.

1.7 Scope of the Study

The scope of this study is centered on the impact of unemployment on the Nigerian economy. The research work is centered on thirty years’ duration from 1997– 2017.

1.8 Structure of the Study.

The study shall comprise of five chapters with a general introduction in chapter one, review of relevant literatures which include the conceptual, theoretical and empirical literature in chapter two. Chapter three shall be on research methodology, looking at the research design, sources and type of data collection, data analysis techniques, model specification to be used. Chapter four of the study shall be data presentation, analysis and interpretation of the data. Chapter five shall be summary, conclusion and recommendation.


Aiyedogbon, J. O., & Ohwofasa, B. O. (2012) Poverty and youth Unemployment in Nigeria, 1987-2011. International Journal of Business and Social Science: 3(20), 269-279.

Abiola and Olaopa (2008), Engaging Youth Employment in Nigeria with Youth and job provision.

Aboyade (1987: 9) Relationship between Income and Poverty.

Aluyo, V. (2002), World Bank, women and poverty alleviation. The Punch Newspaper of Nigeria, April 28, 2000.

Ayinde O.E. (2008) “Empirical Analysis of Agricultural Growth and Unemployment in Nigeria” African Journal of Agricultural Research 3(7): 20-25

Basaliwa M., Opio-Omoding J. and Oladapo O. (2005) “Agricultural and Rural Institute support Project” African Development Fund, Federal Republic of Nigeria.

CBN,2009.StatisticalBulletin.[Online]Available:http://www.cenbank.org/OUT/PUBLICATIONS/STATBULLETIN/RD/2009/STABULL-2009.PDFAccessed:5 November, 2010.CODESRIA Books series Ibadan.27-30.

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