Effect of Unemployment on Economic Growth in Nigeria (1980 – 2011)
CHAPTER ONE
Objectives of the Study
The purpose of this study is contribute in any meaningful way to the idea of how the growing rate of unemployment among young people in Our Society can be deal with, so that its ugly effects can be reduced at least to minimal. The problem caused by unemployment in Our Society is not far-fetched.
- To evaluate the nature of relationship between unemployment and economic growth.
- To determine the effect of unemployment in the Nigeria Economy.
- To offer some recommendations based on the findings of the study.
CHAPTER TWO
LITERATURE REVIEW
Theoretical framework
Unemployment is universally recognized as a bad thing. While economists and academics make convincing arguments that there is a certain natural level of unemployment that cannot be erased, elevated unemployment imposes significant costs on the individual, the society and the country. Worse yet, most of the costs are of the dead loss variety where there are no offsetting gains to the costs that everyone must bear. (Depending on how it’s measured, the unemployment rate is open to interpretation. Learn how to find the real rate. Check out The Unemployment Rate: Get Real.)
However, we have three schools of thought within the problem of unemployment and they include; the socialist school of thought led rounding socialist called hard Max. He was of the opinion that it is only government that can solve the problem of unemployment.
He said that both the voluntary and involuntary type of unemployment are equal. He further stated that those problems are called the army of unemployment. He identified two methods of recruiting them, namely the direct and indirect methods, after all said and done he emphatically and solidly believed that it is the government alone that can eradicate the problem. (Unemployment).
Again, another eminent school of though led by the great Adam Smith antagonized the believe of the socialist. He postulated that if unemployment occurs, the focus of demand and supply will interact in the market.
The third school of thought called the mixed economist led by lord John Keynes, the man who found a solution to the great depression of the early 20’s He reconciled the view of the above two schools of thought (socialist and classical) he said that there is no way an individual or government alone can solve the problem of unemployment in an economy.
He therefore calls for joint effort on the idea of both the individuals and the government in solving the problem (unemployment)
Schiller (1974:39 & 41) said that unemployment leads to poverty.
When the relationship is viewed over time, where as unemployment will diminish families economic income if it last for long period.
He further stated that unemployment constitute a direct and increasing serious threats to a families economic welfare, we have not yet completely described the dimension of that threat the income of the family or people suffering from unemployment will be loss. He also sated that when unemployment, the job seekers are to become increasingly frustrated in their effort to secure employment.
Jobs as scarce and available to only a selected few others are faced with one employment rejection after another job seekers are likely to give up the search.
He stated also that unemployment in an area has a significant effect on the size of the non-participating population accordingly and may discouraged workers could be courted among the equalities of unemployment.
The type and amount of work people undertake when jobs as scarce is another indirect hardship resulting from unemployment. As we noted that the family of unemployment will be low facing a low labour market. Many will have to accept what her employment and wages will have to afford.
The indirect and direct consequence of unemployment growth the burden of a loose labour market on the economic status of the poor to become apparent.
According to sharp, Register, and liftwhch (1988 – 310) unemployment may affect not only current production of goods and services but also futures production. During period of unemployment machines as well as workers are idle. Capital goods plant and equipment become obsolete and are not replaced. The productivity of labour and over all ability of the economy to produce in the future is reduced during periods of unemployment.
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
Research Methodology
The methodology to be adopted in this research study is the Simple Linear Regression Technique employing Ordinary Least Squares (OLS) method. The OLS was employed because of following reasons:
1 . Its technique is simple to understand.
- It possess some interesting prospectus such as
- Linearity
- Unbiased estimation
- Minimum vagaries
- Efficient estimation
- Minimum mean square error estimation
- OLS has been used in many empirical works and its results have always been satisfactory.
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF RESULTS
Presentation of Empirical Results
The empirical results of the required analysis carried out in the study are presented below:
CHAPTER FIVE
SUMMARY OF THE FINDING, CONCLUSION AND RECOMMENDATIONS
Summary of the Findings
This research work “Economic Effect of Unemployment in the Nigeria Economy” was set to find out the impact of unemployment rate on Economic growth in Nigeria. Hypothesis was stated to guide the study. The hypothesis was stated thus:
H0: Unemployment Rate has no significant impact on Economic Growth in Nigeria.
To evaluate this hypothesis, annual time series data on gross domestic product a proxy for economic growth and unemployment rate were collected from the year, 1980 to 2011. To analysis these data, simple linear regression were adopted employing Ordinary Least Square (OLS) techniques.
This analysis yielded some interesting results. From the results it was observed that unemployment rate has no significant impact on economic growth of Nigeria. Also that dependent variable (Gross Domestic Product) has a negative relationship with independent variable (Unemployment Rate).
Conclusions
From the findings of this study, it was concluded that unemployment rate has no significant impact on Nigeria economy. Based on this, any action taking towards reducing unemployment rate will have external effect which must be positive to the economy, because reducing unemployment means increasing employment rate.
Finally, it was concluded that since the relationship that exist between unemployment rate will always lead to increase in gross domestic product.
Recommendation
From the finding of this study, the following recommendations are made.
- Government should try and diversity the economy in order to increase the employment opportunities in the society.
- Agricultural sector should be made attractive by government through attaching some incentive to the sector in order to make it viable.
- Skill acquisition programme should be organizing by government through attaching some incentive to the sector in order to make it viable.
- Soft loans should be given to fresh graduates so as to enable them engage on one economic activity or the other.
- Further studies should be encouraged from economists and other professionals a like to test the effectiveness of some macro economic tools available to the government for enhancing employment opportunities.
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