Nigerian Economy and the National Uneployment

THE GROWTH OF THE NIGERIAN ECONOMY AND THE NATIONAL UNEMPLOYMENT RATE 1996 - 2010

BY

ADEOTI, JULIUS OLAKUNLE

ECONOMICS DEPARTMENT
EMMANUEL ALAYANDE COLLEGE OF EDUCATION, OYO. 08035680332,08058364379

BEING A PAPER PRESENTED AT THE 4TH ANNUAL NATIONAL
CONFERENCE OF THE SCHOOL OF ARTS AND SOCIAL SCIENCES,
ADEYEMI COLLEGE OF EDUCATION, ONDO, ONDO STATE

HELD BETWEEN

23RD – 26TH APRIL, 2012.
VENUE: OLUSEGUN OBASANJO AUDITORIUM, ADEYEMI COLLEGE OF EDUCATION, ONDO, ONDO STATE

THEME: SOCIO-POLITICAL CONFLICTS AND CHALLENGES OF DEMOCRATIC CONSOLIDATION IN NIGERIA.

ABSTRACT
Unemployment in Nigeria has assumed a crisis dimension. Conflicting and arguably controversial views existed on its official statistics. The economy has been growing in recent years, unemployment too is marginally on the rise, and this is a paradox. Using a time series data from 1996 to 2010 and an econometric analysis, this study analyses the issues surrounding this paradox, examines the trends of unemployment growth and addresses the various challenges posed by this subject to the economy. The results shows that variables such as quality of education (technical, vocational and entrepreneurial), decaying and failing economic infrastructure, increasing population and capacity utilization bear positive and significant relationship with unemployment rate in the country. Empirical evidence further shows a growing trend in unemployment rate that is not likely to abate and that growth in the economy is related to the performance in the oil sector which only account for a fractional percentage of employment in the country. On these bases, recommendations were made that a constructive policy reform in the education sector is urgently needed to stem the current tide of “paper qualification education” for quality vocational, technical and entrepreneurial education. Adequate and sustainable policy measures must be implemented in other non-oil sectors of the economy to produce needed capacity for massive employment. Government should also checkmate the astronomical growth in population and streamline the inflation rate to the level desirable for employment generation in the country.

1.0 Introduction
The Nigerian Economy is dominated by Agriculture. Over 60 % of the population is engaged in this sector with an average of 41% contribution to the GDP (NBS, 2010). Despite the dominance of Agriculture, the Crude Petroleum sub sector contributes over 80 % of Nigeria’s foreign exchange. The manufacturing sector’s contribution to the economy is minimal with an average of 3%. Also the communication sector has witnessed a tremendous growth in recent times with an average contribution of 5.5 % (NBS, 2010). According to Ibrahim (2011), the performance of the economy in the second quarter of 2011, was somewhat mixed, with some parameters struggling to gain momentum while others consolidated earlier gains. He noted that, the quarter ended for instance, with inflation inches away from the single digit target.
GDP on the other hand grew with no trace of a slowdown, while naira lost some stability against other major currencies. Economic growth and development for the country was dependent on a number of factors, especially for an economy like Nigeria which had witnessed various levels of decline in growth of some sectors. The Federal Government (FG) has continued to make policies aimed at reviving the ailing economy. It embarked on reforms in sectors like telecommunications, oil & gas, aviation, banking & insurance and water transportation. This coupled with rebalancing of the economy toward services and domestic market development would lead to proportionate boost in the Gross Domestic Product (NBS, 2010). In 2010, the dominance of political activities and discourse as a prelude to the April 2011 general elections had affected the level of economic activities in various sectors of the economy.
However, government through its agencies came up with various initiatives to stimulate the economy and place it in the right direction. Part of such effort was the deliberate attempt to consolidate the gains in the oil sector following the amnesty programme which restored peace in the Niger Delta. This had boosted the level of crude oil and natural gas production to its normal levels before the crisis. This was further boosted by the favourable international crude oil prices which also encouraged oil producing companies to produce more. The nation’s oil sector therefore, regained its high contribution to GDP in 2010. In spite of the recovery and growth in recent years, the economy has been plagued by varying degree of chronic problems ranging from infrastructural decay to failure of an efficient delivery system in power and communication sectors to be specific. There is also a unique combination of rural to urban population movement with consequential stagnating agricultural productivity.
(Enebeli, 2011) revealed that despite the fact that agriculture plays a vital role in national development, about 60% of Nigeria’s arable land is not cultivated. He maintained that farmlands in Nigeria are rated as low to medium but with medium to good productivity, if properly managed.
Akin (2006) on his part, stated that the scope of Nigeria’s development failure despite billions of dollars of oil earnings, is highlighted by the impoverishment of a large percentage of the population where large numbers of people lack productive employment. This is aggravated by high incidence of educated unemployed / underemployed and a catastrophic decline in living standards which produced the growing restiveness and insecurity the country presently witnessed. The dearth of needed foreign direct investment is definitely the price for this social instability. The near collapse of the capital market is another serious economic disaster that has befallen the country. Many jobs have been placed on the line and there has been a monumental loss of investment along with a significant rise in poverty level, signifying that the Nigerian economy is struggling in spite of the country’s vast wealth in fossil fuels, poverty still affects about 57 percent of its population (Nwachukwu, 2012).
Economists refer to this coexistence of vast wealth in natural resources and extreme personal poverty in developing countries like Nigeria as the “resource curse". Although this "resource curse" is more widely understood to mean an abundance of natural resources that fuels official corruption resulting in a violent competition for the resources by the citizens of the nation. Nigeria’s exports of oil and natural gas—at a time of peak prices—have enabled the country to post merchandise trade and current account surpluses in recent years. Reportedly, 80 percent of Nigeria’s energy revenues flow to the government, 16 percent covers operational costs, and the remaining 4 percent go to investors. However, the World Bank has estimated that as a result of corruption 80 percent of energy revenues benefit only 1 percent of the population. The implication of this was better understood when the National Bureau of Statistics released its report in early 2012 which showed that the level of inflation in the country has increased to 12.6% and unemployment stood at 23.9%, having shot up from 21.1% in 2010 and 19.7% in 2009, with higher rates of (25.6%) in the rural area while urban areas has 17.1% (Nwachukwu, 2012).
This paper will specifically be concerned with:
i. Appraising the Nigerian macroeconomic environment. ii. Examining the forms, trend and causes of unemployment in Nigeria. iii. Giving an overview of empirical studies on unemployment in Nigeria iv. Investigating the relationship between growth of the Nigerian economy and the national unemployment rate.
To be able to carry out this study, the following questions would be answered:
a. What macroeconomic features does the Nigerian economy exhibit?
b. What are the forms, trends and causes of unemployment in Nigeria?
c. How is the growth of the Nigerian economy related to the national unemployment rate?
The hypothesis for this study is about whether or not there exist any significant relationship between the growth of the Nigerian economy and the national unemployment rate.
2.0 Literature Review
2.1 Nigerian Macroeconomic Environment
Nigeria is the largest economy in the West African region, the 3rd largest economy in Africa (behind South Africa and Egypt) and on track to becoming one of the top 30 economies in the world (CIA, 2010). It is categorized as a low income, emerging market, mixed economy with a relatively well developed financial, legal, communication and entertainment sectors. It is ranked 31st in the world in terms of GDP (PPP) as of 2009 (Wikipedia .org, 2011).
Currently, it has an underperforming manufacturing sector; the third largest on the continent, producing a large proportion of goods and services for the West African region. According to the CIA (2010), Nigeria’s GDP (PPP) was estimated at $296.1 billion in 2007, $338.1billion in 2008, $357.2 billion in 2009 and $377.6 billion in 2010. Real GDP growth rate was 6.51% in 2005, it declined to 5.63% in 2006, 5.0% in 2009 and rose to 6.4% in 2007, before recording another fall to 6.1% in 2008. In 2010 it stood at 8.2%. The GDP per capita (PPP) was estimated to be $2100 in 2007, $2300 in 2008, $2400 in 2009 and $2500 in 2010.
Although, the economy was previously hindered by years of mismanagement, various economic reforms of past decades have put the country back on track towards achieving its full economic potential. This is evident in the GDP (PPP), as it more than doubled from $170.7 billion in 2005 to $377.6 billion in 2010, although estimates of the size of the informal sector (not included in the official figures) put the actual value close to $520 billion. Correspondingly, the GDP per capita double from $1200 in 2005 to an estimated $2,500 in 2010 (with the inclusion of the informal sector, the estimated GDP per capita hovers around $3,500 (CIA, 2010).
Analysis of GDP by sector, in 2007 and 2009, showed agriculture with 17.7% & 41.8%, Industry with 52.6% & 29.6% while the Service sector had 29.8% & 28.6% respectively. The inflation rate in 2007 was 6.6%, 10.6% in 2008, 11.5% in 2009 and 12.8% in 2010 with a population below poverty line of 54% in 2007, which was cut down to 45% in 2010 (CIA, 2010).
The total labour force in the country was estimated to be 50.13 million in 2007, 51.04 million in 2008 and 47.33 million in 2009 out of over 60 million working age population which comprised both economically active and inactive persons. The occupational distribution of labour shows agriculture as having 70% of the total labour force,the industrial sector has 10% while the service sector accounted for the remaining 20%.
The main industrial produce in the country include crude oil, coal, tin, peanuts, textiles, cement and other construction materials, food products, footwear, chemicals, fertilizers, printing materials, ceramics, steels, small commercial ship construction and repair, entertainment, machinery and car assembly .
The country’s exports in 2007 was $61.79 billion, this increased to $81.09 billion in 2008 and later decreased to $45.43 billion in 2009, with export goods such as petroleum and its products accounting for 95% of the total export, cocoa, rubber, machinery, processed foods and entertainment making up for the rest ((CBN, 2010). The key partner countries for export include the USA accounting for around 42% of the total export, while Brazil got 25.6%, India 9%, Spain 7.3% and France 5.1% and other countries accounted for the remainder in 2008 (CBN, 2010).
Total imports into the country was estimated to be $42.1 billion in 2009, this included machinery, chemicals, transport equipment, manufactured goods, food and live animals. China took 16.1%, Netherlands took 11.3%, the USA with 9.8%, United Kingdom 6.2%, South Korea 6.1%, France 5.1% and Germany 4.4% in 2008 (CBN, 2010).
The gross external debt in 2009 stood at 17.8% of the GDP while total revenue and total expenditure was $10.49 billion and $18.08 billion in 2009 respectively. The country’s credit rating by Standard and Poor showed B+ for both domestic and foreign debts with an outlook rating as stable while rating by Fitch showed BB−.
The country’s foreign reserves which stood at about $53 billion as at December 2008 dropped to $50.05 billion in January 2009. It further dropped to about $49 billion in February and the quarter closed with about $47 billion in 2009. This was enough to finance 20 months of import which exceeded the 6 months of imports under the West African Monetary Zone (WAMZ) arrangement (Okeke, 2009). Available data showed that a greater proportion of foreign exchange disbursement goes to the productive sector. This is however not reflected in terms of actual industrial output which declined for the second year in 2008. Level of productive investment is in no way comparable to the high and rising volume of transaction in the foreign exchange market (Micheal, 2009).
2.2 The Concept of Unemployment
There is no standard definition of unemployment as various countries adopt definitions to suit their local priorities. The International Labor Organization’s definition, however, covers persons (aged 15 – 64) who during the reference period (usually the week preceeding the survey period for at least one hour), were currently available for work, seeking for work, but were unable to find work (NBS, 2011).
The concept of unemployment may apply to labour as a factor of production. In a general sense, unemployment is defined as a state of ‘joblessness’. However this definition is too wide to be satisfactory because many categories of people who are without work should not be classified as unemployed in any meaningful sense. For instance various labour codes prescribe lower and upper age limits for the labour force (those who can be legitimately regarded as either working or available for work).
This implies that those who are below the limit or above the upper limit are regarded as falling outside the labour force. When such people are without work and even though may be willing and able to work, they don’t feature in unemployment statistics (Osinubi, 2005).Even people who fall within the age limit but are physically challenged i.e. cripples, lunatics or imbecile including full time students, trainee and housewives are not always regarded as unemployed.

Another controversy in the definition of this concept relates to the determination of a minimum period of idleness that qualifies a person as ‘unemployed’. Usually, in labour force surveys, people who are without work during the reference period are classified as ‘unemployed’. This reveals another issue, relating to the reference period which varies from country to country. However, the choice of whichever reference period can significantly affect the magnitude of unemployment as measured in labour force survey (Osinubi, 2005).

The labour force or workforce of a country is divided into two groups: the employed and the unemployed. To be counted as employed, a person must have either a full time job or a part time job. This includes students who do part-time work while at college, people who are temporarily absent from their jobs because of illness, bad weather, vacation, labour-management disputes, or personal reasons. People in the working-age population (the economically active or workforce and the economically inactive) who are neither employed nor unemployed are classified as not in the workforce (Michael et al, 2009).

Conceptually, people are classified as unemployed if they did not work at all as paid employee during the reference period; or if they worked in their own business, profession, or on their own farm. Also, people are unemployed if they meet any of the following criteria: they had no employment during the reference period; they were available for work at that time, and they made specific efforts to find employment sometime during the period (Emmanuel, 2006).
Jhingan, (1996) viewed unemployment as “involuntary idleness of a person willing to work at the prevailing rate but unable to find job. This implies that voluntarily unemployed people, who do not want to work and those who are not prepared to work at the prevailing wage rate, are not to be regarded as unemployed.
However, it is generally agreed that unemployment like inflation is a symptom of basic economic illness or macroeconomic disequilibrium and the controversy on the “appropriate” conceptualization of the subject is still unabated (Anyanwu & Oaikhenan, 1995). The theoretical foundation of this concept is vast; encompassing the entire spectrum of the classical and neo-classical, as well as the neo-Keynesian and new classical schools (Emmanuel, 2006). Nevertheless, various forms of unemployment identified in the theory include:
i. Demand- deficient or Cyclical Unemployment: This occurs when there is insufficient demand to necessitate the employment of those who want to work. It is the type that Keynesians focus on particularly, as they believe it happens when there is disequilibrium in the economy. It is also known as cyclical unemployment because it varies with the trade cycle. When the economy is booming, there will be lots of demand and firms will be employing large numbers of workers. Demand-deficient unemployment will at this stage of cycle be fairly low. If the economy slows down, then demand will begin to fall. When this happens, firms begin to lay workers off as they do not need to produce so much: thus, demand-deficient unemployment arises. In Keynesian economics, any level of unemployment beyond the natural rate is most likely due to insufficient demand in the overall economy. During the recession that aggregate expenditure is deficient causing the underutilization of inputs (including labour). Aggregate expenditure (AE) can be increased, according to Keynes, by increasing consumption spending (C), increasing investment spending (I), increasing government spending (G), or increasing the net of exports minus imports (X-M). {AE = C + I + G + (X-M)} ii. Seasonal unemployment: This occurs when the demand for a particular labour skill is limited only to a certain period of the year. For instance, some goods are only in high demand during a short period of the year, necessitating the expansion of output and thus high employment, while the reverse is the case for the rest of the year, thereby creating seasonal unemployment. Mostly, seasonal unemployment is less severe and tends to occur in certain industry and its effects are often highly regionalized.Iii. iii. Frictional or Search unemployment: This is the unemployment that occurs when individuals lose or choose to leave their jobs in search of new ones. On the average, it will take a reasonable period of time before another job is secured. The time lag between the previous job and securing a new job explains this particular unemployment. The more efficiently the job market matches people and jobs, the lower this form of unemployment. However, if there is imperfect information and people don’t get to hear of jobs availability that may suit them, then frictional unemployment will endure. iv. Structural unemployment: It occurs when the structure of industry changes. As an economy develops over time, types of industry may well change. This may be due to change in people’s taste or it may be because of change in technology and the product or service is no longer in demand. The extent of structural unemployment depends on various factors, including mobility of labour- if people are able to quickly switch jobs from a declining industry to a rapidly growing ones, then there will be less structural unemployment; the pace of change in the economy – the faster the change taking place in people’s taste and demand and supply, the more the structural unemployment there may be, since industries have to adapt more quickly to changes; the regional structure- if the industries that are dying are heavily concentrated in one area, it may be much more difficult for people to find new jobs.
v. Natural rate of unemployment: This is the summation of frictional and structural unemployment. It is the lowest rate of unemployment that a stable economy can expect to achieve, seeing as some frictional and structural unemployment is inevitable. Economists do not agree on the natural rate, with estimates ranging from 1% to 5%, or on its meaning — some associate it with "non-accelerating inflation". The estimated rate varies from country to country and from time to time.

2.2 Unemployment in Nigeria
Unemployment in Nigeria can be broadly divided into two main groups: Open unemployment and Underemployment or disguised unemployment (Emmanuel, 2006). Lambo (1987) opines that open unemployment is mainly associated with the urban areas of the country, while disguised unemployment applies to the rural agricultural zone. This view was corroborated by Bakare (2011) when he stated that much of the ‘open’ urban unemployment in the country is due to structural factors in the educational system and its interface with the labour market i.e. the mis-match problem as well as the roles of a ‘wage gap’ between the ‘high wage’ (e.g. petroleum) sector and the ‘low wage’ sector (e.g. agriculture). According to Todaro (1992), open unemployment involves people who are able and are eager to work but no suitable jobs are available, whereas underemployment or disguised unemployment is mainly for people who are normally working full-time but whose productivity is so low that a reduction in hours would have a negligible impact on total output.

2.2.1 Review of Related Studies on Unemployment in Nigeria
The following studies on unemployment in Nigeria were briefly reviewed in this study.
a. Egunjobi, T.A. (2006) writing on Crime and Unemployment in Nigeria: An Empirical Analysis; submitted that variations in minor crimes is best accounted for by variations in unemployment and expenditure on police (89%), followed by minor offences (51%) and total crime (44%) except for serious crime (18%). His estimates were found to be statistically significant for the three out of four crime variables (minor offences, minor crime, and total crime) except for serious crime. For expenditure on police coefficients, only two (minor crime and minor offences) out of the four variables were significant. He concluded that reduced rate of unemployment would reduce crime especially minor crimes and offences while serious crimes appeared to be unrelated to labour market conditions but to criminal inclination.
b. Emmanuel, A.O. (2006) investigated the relationship between unemployment and selected macroeconomic variables, including growth rate of GDP, inflation rate, capacity utilization in the manufacturing sector, population growth rate and the lending rates. The study found that the correlation and the causality results between economic growth rate and unemployment rates were not theory consistent and therefore brought to the fore the inadequacies of the received theory to explain the unemployment phenomenon in Nigeria.
c. Inang, E.E. & Ebong, F.S. (2006) analyzes the problems of rural unemployment and underemployment in Nigeria. The paper identified that the problems of unemployment and underemployment exist in a high and growing dimension in the country contrary to official reports. He submitted that, while underemployment is a rural phenomenon, unemployment is a characteristic of urban centres. Also, unemployment rates among those with secondary education and above were found to be higher in the urban than in the rural areas, but the rates for those with no schooling or with primary education only were higher in the rural areas. Therefore, unemployment is largely an urban sector problem while the bane of rural/agricultural sector is underemployment.
d. Adebayo, A.A. and Ogunrinola, I.O. (2006) examined the dimension of unemployment challenges in the context of the framework of NEEDS. His analysis showed that Nigeria’s unemployment problem is significant and multidimensional. The unemployment rates manifested with significant differences in incidence across the states of the federation. Also, rural unemployment rate trend was found to be consistently lower than the urban rates from 1985 to 1988. However, since 1999, rural unemployment rate became consistently higher (with the exception of 2003) than the urban rate. He also submitted that significant disparity was noticed in access to employment opportunity across sex. His work was concluded that NEEDS, in its packages and implementation, provides a necessary condition for reducing unemployment rate in Nigeria through increased investment in different sectors.
e. Douglason, G.Y. and Augustus, N.G. (2006) explored the relationship between productivity and unemployment in Nigeria. His result showed that productivity growth and unemployment rate neither Granger-cause the other and that both variables only exhibit a mere statistical relationship, therefore causality between them is independent.
f. Adewole, M.A. (2006) studied the institutional foundation of unemployment in Nigeria. He showed that the attainment and sustenance of full employment in a modern economy is dependent on the quality of political leaders, their choice of discount rate and institutional restrictions that place a limit on the predation of public resources or its conversion to private use. He further stated that in the absence of institutional inhibitions, political leaders can handle to build either a developmental or a predatory state. He then submitted that high quality political leadership can ensure zero or near-zero predation and in addition, build institutions to accelerate growth and development as well as ensure full or near full employment.

2.3 Causes of unemployment in Nigeria
Causes of unemployment in Nigeria can be analysed from both the demand and supply side of the labour market (Bakare, 2011). According to Adebayo (1999) unemployment arises whenever the supply of labour exceeds the demand for it at the prevailing wage rate. On the supply, there is the rapidly growing urban labour force arising from rural-urban migration is usually explained in terms of push-pull factors. The push factors include the pressure resulting from man-land ratio in the rural areas and the existence of serious underemployment arising from seasonal cycle of climate. These factors are further strengthened in Nigeria by lack of infrastructural facilities, which makes rural life unattractive.
Early analysis of unemployment situation in Nigeria also pointed to the role of a ‘wage gap’. The ‘wage gap’ model of unemployment has its root in the work of Lewis (1985) and Tidrick (1975) and indicates that as the ‘high wage’ sector (e.g. petroleum) grows relative to the ‘low wage’ sector (e.g. agriculture), the former draws labour from the latter, thus leading to increased ‘open’ unemployment as the ‘high wage’ sector is unable to absorb the available supply due to its high capital to labour ratios.
Diejomaoh in Sesan (2003) identified the following as causes of unemployment in the country:
i. The predominance of non-professionals among graduates produced annually. ii. The low absorptive capacity of the Nigerian labour market iii. Inordinate aspiration and expectations of graduates iv. Many products of the educational system have not been really equipped with the universality that their educational experience is expected to develop in them individually.
v. The over production of arts and social sciences graduates. vi. Poor performance of the economy; and vii. Over dependence on the oil sector for the financing development
Further, the survey conducted by the National Manpower Board in 1986 confirmed that the foregoing factors as the main cause of high rate of unemployment in Nigeria, stressing the significance of Nigeria’s low absorptive capacity and the poor performance of the economy as major among the causal factors.

2.4 Trend of National Unemployment Rate in Nigeria
Unemployment rate means the percentage of labour force that is unemployed i.e.
Unemployment rate = No of Unemployed × 100
Total Workforce 1

Table 1: National Unemployment Rate: 1996-2011
Year National
Rates (%) Urban
Rates (%) Rural
Rates (%)
1996 2.8 6.1 2.8
1997 3.4 6.1 2.8
1998 3.5 4.9 2.8
1999 17.5 5.5 2.5
2000 13.1 7.2 3.7
2001 13.6 5.4 3.1
2002 12.6 9.5 13.3
2003 14.8 17.1 13.8
2004 13.4 11.0 12.1
2005 11.9 10.1 12.6
2006 12.3 10.0 15.1
2007 12.7 10.0 12.6
2008 14.9 10.0 12.6
2009 19.7 19.2 19.7
2010 21.1 22.8 21.1
2011 23.9 17.1 25.6
Source: Compiled from 2000, 2010 and 2011 NBS reports.

The percentage of unemployment was relatively low in 1996 as shown in the table above. The rate was 2.8% in 1996 increasing to 3.5% in 1998 and then skyrocketed to 17.5% and 13.1% in 1999 and 2000 respectively. The rate later dipped to 13.6% in 2001, 12.6% in 2002 and again increased to 14.8% in 2003. The fluctuation continues till 2009 when it jumped to 19.7% and continued to increase to 21.1% in 2010 and 23.9% in 2011.
The Nigerian unemployment report in 2011 prepared by the NBS shows that the rate is higher in the rural areas (25.6 percent) than in the urban areas (17.1 percent).
The result of the survey further shows that persons aged 0 to14 years constituted 39.6 percent, those aged between 15 and 64 (the economically active population), constituted 56.3 percent, while those aged 65 years and above constituted 4.2 percent.
Before now, not a few economic watchers have queried the recorded Gross Domestic Product, GDP, growth rates in Nigeria, which over time are contrary to the growing rate of unemployment. Amid this high rate of unemployment, the economic watchers have noticed that there is an increasing trend of disinterest by the emerging younger generation in highly labour-intensive works such as agriculture and factory work in preference for white collar jobs, resulting in many preferring to remain in the labour market rather than take up such jobs. The culminating effect was that based on the definition of unemployment used, and owing to factors largely outside the control of the Nigerian government, the result of the survey showed that the national unemployment rate increased to 23.9% in 2011 compared to 21.1% in 2010 an 19.7% in 2009. It is conceivable that the unemployment rate may have been a lot worse without many of the employment generating policies of government which has helped to curtail the rise compared to other countries in the world where rates have risen faster than Nigeria.
3.0 Methodology
The data used in this study is a secondary data collected from various issues of National Bureau of Statistics’ reports and the Central Bank of Nigeria’s statistical bulletins. Various journal articles were also used in data gathering. The data collected were analyzed using a combination of descriptive and regression analysis.
3.1 Model Specification
The model for this study is specified in a function form as:
UNEMPL = f (GGDP, INFL, ALEDUC, CAPUT, POPGRT, LNDRT) --------------- (1)
Where:
GGDP = Growth rate of the real gross domestic product
INFL = Inflation growth rate
ALEDUC = Federal allocation to education
CAPUT = Capacity utilization in the real sector
POPGRT = Population growth rate
LNDRT = Lending rate in the economy
Equation 1 could be expressed in a log linear form as
UNEMPL = β0 + β1GGDP+ β2INF + β3ALEDUC + β4CAPUT + β5POPGRT + β6LNDRT -------- (2)
UNEMPLt = β0 + β1GGDP t + β2INF t + β3ALEDUC t + β4CAPUT t + β5POPGRT t
+ β6LNDRT t + Ut------------ (3)
Where Ut is the error term (stochastic or disturbance term) and assumed to be normally distributed in zero mean and constant variance and t is the time trend. The parameters for estimation from equation 3 are β1, β2, β3, β4, β5, and β6. On a-priori expectation: β1