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Unemployment and Inflation: Implication on Poverty Level in Nigeria

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  • Siyan, Peter
  • Adegoriola, Adewale E.
  • Adolphus, James Ademola

Abstract

This study is carried out to empirically examine the implication of unemployment and inflation on poverty level in Nigeria from 1980-2014. Three variables are used in this paper which are Poverty level, Unemployment Rate and Inflation Rate. The variables were subjected to unit root test and they were all stationary at first difference I(1). Using the Johansen test, the variables were found to be co-integrated at 5% level of significance. Vector Auto Regressive (VAR) Model was used to determine the short-run relationship between the variables and the forth lag was selected based on the lag selection criterion. Forecast Error Variance Decomposition (FEVD) was obtained using the cholesky decomposition of the VAR residual. The result obtained showed the proportion of the variations in Poverty, inflation and unemployment rate attributed to their respective lag values. Granger causality test was carried out from the VAR model, and the result indicated that there is a bi-causality between inflation and poverty. There is two-way causality between unemployment rate and poverty. There is one-way causality between unemployment rate and inflation rate. From the conclusion, it recommended that since unemployment causes poverty in Nigeria, government should review the education curriculum which will include practical skill acquisition programme in the educational system so as to produce graduates that are employers of labour rather than employment seekers. The government should give incentives to producers to enable them increase domestic production which will bring down price level. Nigerian government should strive to reduce poverty level by formulating and implementing poverty reduction programme like social security which will reduce inflation and unemployment rate and will lead to economic growth.

Suggested Citation

  • Siyan, Peter & Adegoriola, Adewale E. & Adolphus, James Ademola, 2016. "Unemployment and Inflation: Implication on Poverty Level in Nigeria," MPRA Paper 79765, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79765
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Okolo, Chimaobi & Attamah, Nicholas, 2018. "Macroeconomic implications of Raising Income:The Nigerian Experience," MPRA Paper 89640, University Library of Munich, Germany.
    2. Philip Ifeakachukwu Nwosa & Temitope Adebisi Adeoye, 2021. "Globalization And Poverty: Evidence For Lower-Middle Income Country," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 19(1), pages 63-72, May.
    3. Ebenezer Olamide & Kanayo K. Ogujiuba & Andrew Maredza & Phetole Semosa, 2022. "Poverty, ICT and Economic Growth in SADC Region: A Panel Cointegration Evaluation," Sustainability, MDPI, vol. 14(15), pages 1-15, July.
    4. Alnaa, Samuel Erasmus & Matey, Juabin, 2022. "Macroeconomic Policy Formulation: The Driver of Economic Welfare in Ghana," MPRA Paper 113041, University Library of Munich, Germany, revised 11 Apr 2022.
    5. Tarek Kacemi & Sallahuddin Hassan, 2018. "Causal Linkage between Inflation and Unemployment: An evidence from the Selected MENA Countries," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 6(1), pages :121-131, March.
    6. Egla Mansi & Eglantina Hysa & Mirela Panait & Marian Catalin Voica, 2020. "Poverty—A Challenge for Economic Development? Evidences from Western Balkan Countries and the European Union," Sustainability, MDPI, vol. 12(18), pages 1-24, September.
    7. Abdul Rehman & Laura Mariana Cismas & Ioana Anda Milin, 2022. "“The Three Evils”: Inflation, Poverty and Unemployment’s Shadow on Economic Progress—A Novel Exploration from the Asymmetric Technique," Sustainability, MDPI, vol. 14(14), pages 1-16, July.

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    More about this item

    Keywords

    Unemployment; Inflation; Poverty; Vector Auto regressive (VAR) Model;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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