Effect of Formal Education on Standard of Living in Nigeria

Abstract

This study investigates the relationship between formal education and the standard of living in Nigeria by analyzing the impact of government expenditure on education and school enrolment on the country's GDP per capita as a proxy for standard of living. Using 30 years of annual time series data and employing the ordinary least square (OLS) method, the study evaluates the time series properties of the variables with Augmented DickeyFuller (ADF) and Philip Peron unit root tests, and tests hypotheses using Ftests and t-tests. The findings reveal that school enrolment and government expenditure on education jointly explain a significant portion (93.33%) of the variation in GDP per capita, highlighting the vital role of education in driving economic growth and improving the standard of living in Nigeria. Specifically, higher enrolment rates in secondary and tertiary education exhibit positive and significant effects on GDP per capita, indicating that investments in higher education lead to increased productivity, higher incomes, and improved economic outcomes and living standards. However, a notable finding shows that government expenditure on education has a negative and insignificant effect (-27.45) on GDP per capita, calling for further exploration into the effectiveness and allocation of education spending for sustainable economic growth. As a result, several recommendations are proposed, including prioritizing investment in secondary and tertiary education to enhance individuals' skills and job opportunities, improving education quality and access, optimizing government spending on education, fostering collaboration between the public and private sectors in education, and combining education initiatives with poverty alleviation programs to address root causes of poverty and improve living standards for vulnerable populations, contributing to Nigeria's long-term economic development and prosperity.