The Nexus Between Unemployment Rate And Some Macroeconomic Variables In Nigeria

Abstract

In a world grappling with unemployment issues, this study focused on the unemployment rate in Nigeria, examining the impact of population growth rate (PGR), population size, Gross Domestic Product per capita (GDPC), and Gross Fixed Capital Formation (GFCF). Unemployment is a widespread problem, leading to disparities in labor markets, deepening poverty, and substandard living conditions. The study aimed to determine the order of integration for these variables and assess both short-term and long-term effects on the unemployment rate. Key tools used for analysis included the Augmented Dickey-Fuller (ADF) test, the Jarque-Bera test, and the Co-integration test. Results showed that PGR, GDPC, and GFCF were integrated of order 1 (I(1)), while Population was integrated of order 0 (I(0)). Over the study period, all series exhibited trends but remained stationary. The co-integration ARDL bound test revealed a long-term link between the variables. Based on the error correction coefficient, the system's prior period disequilibrium should be corrected at a rate of 12.1% every year. The long-term effects of both gross fixed capital formation (GFCF) and gross domestic product per capita (GDPC) on the unemployment rate were shown to be substantial. The study suggests making significant investments in small and medium-sized businesses in order to increase GDPC and GFCF, which will have a favourable long- and short-term impact on unemployment rates.