Human Capital Development Income Inequality and Economic Growth

Abstract

This paper examined the relationship among human capital development, income inequality and economic growth in Nigeria and how human capital development transmit shocks to economic growth using government expenditures on education and health and secondary school enrolment as proxies for human capital development and Gini coefficient as proxy for income inequality over the period of 1980-2016. Data for the study were sourced from the World Development Indicators (WDI). The Auto Regressive Distributed Lag (ARDL) and Vector Auto Regression(VAR) were used as the estimation techniques .The results from the ARDL showed that ,there exist a long and short term co-movement among human capital development, income inequality and economic growth during the period under review .Also the result from the VAR revealed a standard deviation shock from income inequality exerted a negative and significant impact on secondary school enrolment while other variables like government expenditure on education and government expenditure health exerted a positive and significant impact. Thus, in order to reduce income inequality and increase economic opportunities to all citizens, Nigeria government and policy makers need to allocate adequate resources in developing human capital as this will enhance economic growth in the country.