Effect of Population Growth on Unemployment in Nigeria

Abstract

This study investigates the impact of population growth on the unemployment rate in Nigeria using the Auto Regression Distributed Lag (ARDL) method. The Augmented Dickey-Fuller (ADF) test is used as a tool to determine series stationarity. Variables considered in the study include unemployment, literacy rate, life expectancy, real GDP, and population. The ARDL cointegration test is used to determine whether there is a cointegration relationship between variables. Furthermore, the results of the cointegration test indicate the presence of cointegration between the explanatory variables and the unemployment rate in Nigeria. The results of the study show that population growth and life expectancy have a positive impact on unemployment in Nigeria. In contrast, the literacy rate and the unemployment rate have an inverse relationship. Additionally, non-oil real gross domestic product shows a negative association with the unemployment rate. The Granger causality test was used to examine further the correlation between population growth and unemployment in Nigeria. The results show that there is no bidirectional causal relationship between population and unemployment, suggesting that each variable is not significantly responsible for the other. However, the probability value of the Granger causality between population and unemployment is 0.1413, which is higher than the significance level (0.005) leading to the rejection of the null hypothesis. This implies that population growth Granger causes unemployment in Nigeria. This result corresponds to the expectations of a developing country like Nigeria, where the number of jobs created does not keep up with population growth. Keywords: Economic growth, Literacy rate, Life expectancy Population growth rate, Unemployment