TABLE
OF CONTENTS
CHAPTER
ONE
INTRODUCTION
1.1 Background
to the Study
1.2 Statement
of the Problem
1.3
Research
Questions
1.4
Objectives of the Study
1.5
Hypotheses of the Study
1.6
Significance of the Study
1.7
Scope and Limitations of the Study
CHAPTER
TWO
REVIEW
OF RELATED LITERATURE
2.1
Theoretical Literature
2.1.1 Classical
Theory of Unemployment
2.1.2
Keynesian Theory of Unemployment
2.1.3
Efficient Wage Theory of Unemployment
2.1.4 Insider-Outsider Theory of Unemployment
2.1.5 Search
Theory of Unemployment
2.1.6
Concepts of Economic Growth and Unemployment
2.2 Empirical Literature
2.3 Gap in Literature
CHAPTER THREE
METHODOLOGY
3.1
Research Design
3.2
Model Specification
3.3
Estimation Techniques
3.4
Data Discussion
3.5
Data Source
CHAPTER
FOUR
PRESENTATION
AND ANALYSIS OF RESULTS
4.1 Unit Root Test
4.2 Cointegration Result
4.3 Vector Error Correction Model (VECM)
4.4 Granger
Causality
4.5 Tests of Hypotheses
4.6 Implication of the Study
CHAPTER
FIVE
SUMMARY,
RECOMMENDATIONS AND CONCLUSION
5.1 Summary of Findings
5.2 Recommendations
5.3 Conclusion
References
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Unemployment constitutes
the major impediments to social progress. A part from representing a colossal waste
of a country’s manpower resources, it generates welfare loss in terms of lower
output thereby leading to lower income and well-being. It is see as both macro
and socio-economic problem; which arises
as a result of insufficient and non- availability of jobs to correspond with
the growing population (Uwazie & Ihugba, 2009). It is defined by the
international labour organization (1982) as comprising all the persons above a
specified age who during the reference period, are without work, that is, are not in paid employment. Feridun and Akindele (2006) identified
unemployment as one of the major challenges confronting the Nigeria economy. Bello
(2003) defined unemployment as the percentage of the labour force that is
without job, but is able and willingness to work. According to Noko (2013), unemployment in
Nigeria is defined as the proportion of labour force that was available for
work but did not work in the week proceeding the survey period for at least
39hours. Muhammand, Inuwa, and Oye (2011) submitted that unemployment
constitutes a series of serious development problems and is increasingly more
serious all over Nigeria.
There is actually
no nation that is absolutely free from unemployment. The major difference is the
degree and pervasiveness of this plight. According to the central intelligence
Agency (CIA ) (2014), Nigeria with an estimated population of about 177million
(2014 est.) following an April 2014
statistical “rebasing “ exercise, Nigeria emerged as Africa’s Largest economy, with 2013 GDP estimated at US
&502 billion with a GDP growth rate of 6.2 percent (CIA). As impressive as
the above figures may appear, youth unemployment has been one of the major
problems facing Nigeria. A high level of unemployment and unemployment is one
of the critical socio-economic problems facing Nigeria as the labour face with
an increasing proportion of youths who are unable to get absorbed into the
labour market. As a result, youths are especially affected by unemployment.
Furthermore, young people are more likely to be employed in jobs of low
quality, underemployed and working long hours for low wages engaged in dangerous
work or receive only short term and informal employment arrangements. The
inadequate number of socio-economic, political
and moral consequences. This has resulted in poverty in Nigeria which
is awful; and this rising poverty and unemployment are identical bane with a wide
trend, which affects people in various depth and level at different times and
phases of existence.
The term unemployment could be used
in relation to any of the factors of production which is idle and not being
utilized properly for production. However, with reference to labour, there is
unemployment if it is not possible to find jobs for all those who are eligible
and able to work below capacity or not fully utilized in production
(Anyawuocha, 1993). Unemployment can either be voluntary or involuntary. Voluntary in the sense that one chooses not
to work because he or she has means of support other than employment. Example
is an idle rich man. On the other hand, involuntary unemployment exist when
persons who are eligible and willing to
work at the prevailing rate of pay are unable to find work. (Anyanwa, 1995; Amassoma and Nwosa, 2013).
Unemployment according to Lipsey
(1960; and Noko, 2016), brings about
economic waste and cause human suffering. According to Osinubi (2006),
unemployment is as a result of the inability to develop and utilize the nations
manpower resources effectively especially in the rural sector. The
socio-economic effect of unemployment includes: fall in national output,
increase in rural- urban migration, waste of human resources, high rate of dependency ratio, poverty, recession, frustration, all sorts of
immoral acts and criminal behaviour
e.g prostitution , armed robbery
etc. The social effects of
unemployment bring to light the need to
proffer possible solution to salvage our nation Nigeria, which the possible
solutions are various programs that have been initiated by the government at various levels in order to address the
problem. Such as National Economic empowerment and Development Strategy (NEEDS)
and National Directorate of Employment.
1.2 Statement of the Problem
The incidence of unemployment in
Nigeria has been deep and wide spread, cutting across all facets of age groups
educational strata and geographical entities. Unemployment has reached a very
alarming proportion in Nigeria, with a great number of the unemployed being
primary and secondary school learners and university graduates (Durosinmi, 2012).
This situation has recently be compounded by the increasing unemployment of
professionals such as bankers, engineers and doctors. The toll is within the
productive segment of the Nigeria population (Jelilov, Gylych; Muhammad Yakubu,
Maimuna, 2015). The magnitude of unemployment in Nigeria not justified by available financial statistic phenomenon. The reason is that there have been steady fluctuations in unemployment rate in Nigeria (Bello 2003). Theoretically, unemployment is
always expected to be highly and positively correlated with poverty while
economic growth is considered as the engine force of conquering unemployment
and poverty (Obadan, 1997). However, this is not always the case as economic growth
alone cannot over come all the crucial factors that contribute to unemployment
and poverty. This appears to be the case with Nigeria where economic growth and
unemployment rate are fluctuating. For instance in 1981 GDP was N144.83 and unemployment 5.2%, N1982 GDP was N154.98 and unemployment 4.3%, in 1990 GDP was N499.68 and unemployment was 3.5%, 1991 GDP was N596.04 and unemployment was 3.1%, 2001
GDP was N 8134.14 and unemployment was
13.7%, 2002 GDP was N11.332.25 and unemployment was 12.2% 2015 GDP was N
94,144.96 and unemployment was 9.0%, 2016 GDP was N 101,489.49 and unemployment was 13.4%.
These have led to very high dependency
ratio and low standard of living with a great multitude of people in Nigeria
living in servile misery. Moreover, unemployment and poverty have led to rapid
increase in criminal activities and social vices and still remains potential
sources of political instability in Nigeria for the disenchanted, disgruntled
and revolutionary elements in the society.
The prolonged trend in the terrible
situation of unemployment mention above led the researcher to investigate the empirical
relationship between unemployment and Nigeria’s economic growth in Nigeria for the
period of 1980-2016
1.8
Research
Questions
In
the course of this study, the stated question below is sought to be answered.
1.
Is there any significant long run relationship between unemployment and economic
growth in Nigeria?
2.
To what extent does unemployment rate impact on economic growth in Nigeria?
3.
Is there significant causal relationship existing between unemployment and
economic growth in Nigeria
1.9
Objectives of the Study
The main objective
of this study is to investigate empirical relationship between unemployment and
economic growth in Nigeria. While the specific objectives are:
1. To determine the existence of long run
relationship between unemployment and economic growth in Nigeria.
2.
To ascertain the extent that unemployment rate impact on
economic growth in Nigeria.
3.
To find out if there is significant causal relationship existing between unemployment
and economic growth in Nigeria.
1.10
Hypotheses of the Study
Hypothesis
of this study are stated below in null form as this:
1. Ho: There is no significant
long run relationship between unemployment and economic growth in Nigeria.
2. Ho: unemployment rate has no
significant impact on economic growth in
Nigeria.
3. Ho: there is no significant
casual relationship existing between unemployment and economic growth in
Nigeria.
1.11
Significance of the Study
This
study will be very crucial since it will give a perception into literature and assist
to nude the causes and effects of unemployment
in Nigeria. Unemployment in any system
is seen as a policy failure and there is concerted effort on the part of the
government in checkmating the impact of unemployment in an economy. The study of
unemployment is relevant to the policy makers, politician, general populace, and
researchers/student of economics. It will avail policy makers with the
knowledge of the state of unemployment in the system which will help them formulate
good policies that will geared to wards eradicating unemployment. It will also
be a great help to the general populace to understand that unemployment is a
persistent that needs to faced with rapid attention in order to achieve economic
growth and development. Finally, it will be of extreme relevant to future
researchers because it will serve as a springboard for further research.
1.12
Scope and Limitations of the Study
This study will cover the whole of
Nigeria, from the period of 1980 to 2016. The scope of this study will
concentrates on the relationship between unemployment and economic growth and
development of Nigeria with emphasis on the effect of unemployment on
economic growth in Nigeria. The
study made use of time series data between 1980-2016. Data was collected from secondary
sources. Explicitly, the major sources of data is Central Bank of Nigeria (CBN).
That is, the quantitative data was use to determine the rate of unemployment on economic
growth and development of Nigeria. As it regard to the limitation encountered,
the study of this cannot be completed without the researcher experiencing some
constrains. The first major limitation of the study experienced by researcher
was data availability, financial constraint and lack of time. This is because
both academic course work and the study were taking place simultaneously.
Despite all the limitation adequate effort was put place to ensure that all
constraints were overcome.
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