Unemployment, Income Inequality and Standard of Living in Nigeria
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2022-12
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Lead City University
Abstract
This research study examines the impact of unemployment and income inequality on the standard of living of the Nigerian populace within the period 1981-2019. It seeks to identify the causes of unemployment and income inequality, determine the impact of unemployment on the living standard and examine the impact of income inequality on the living standard of the Nigerian populace. The data were sourced mainly from the CBN Statistical Bulletin (2020) and WDI (2020). Descriptive analysis, trend reviews, and inferential statistics such as correlation analysis, and autoregressive distributed lag approach were employed to provide answers to the research hypotheses. The findings revealed that all the variables converge to their long-run equilibrium at the first difference. Also, there exists a long-run relationship among unemployment, income inequality and standard of living in Nigeria. Findings show that the current level of unemployment negatively drives income inequality but the subsequent lags positively influenced income inequality in the short run. Meanwhile, income per capita affect short run inequality positively and significant. The long-run estimate shows that unemployment has an indirect and significant impact on income inequality in the long-run. The negative impact of income per capita on income inequality is not statistically confirmed. Furthermore, the study found that unemployment rate impacted income per capita negatively in the short run but positively in the long run. Income inequality has positive impact on income per capita statistically significant at 10% in the short run. Meanwhile, in the long run, income inequality negatively and significantly affects income per capita during the periods understudied. On the policy, the government should focus on strategies that will curtail unemployment and guarantee equal distribution of income. Possible factors responsible for high unemployment and increasing unequal distribution of income in Nigeria include non-diversification of the economy and the existence of unused labour surplus which has resulted in rigidities in the labour market and in the wage structure of the country.
Keywords: Unemployment rate, inequality, real income per capita, Nigeria.
Word Count: 298
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Kate Turabian