Impact of International Remittances on Unemployment in Nigeria

Izuchukwu Chetachukwu Okeke

doi:10.7176/jesd/12-1-05

Abstract

Despite the implementation of stabilization measures during the present recession in Nigeria, unemployment has assumed an alarming dimension and a crisis proportion with millions of able-bodied persons who are to accept jobs at the prevailing wage rate but are unable to find placements. Unemployment can be reduced in developing countries through developmental projects but this can be achieved due to lack of finance. Sequel to that, remittance inflow serves as finance for investment purposes. This study focuses on the impact of international migrant remittances on unemployment rate in Nigeria bearing in mind that reducing the rate of unemployment is one of the macroeconomic objectives of every country. An unemployment rate model was formulated and the unit root test was first applied to the data set. The time series were stationary and the two-stage least squares (2SLS) method was used to identify the impact of remittances on unemployment rate in Nigeria. Findings reveal that international remittances affect unemployment negatively and there exists a unidirectional causality between international migrant remittances and unemployment without feedback. The study recommends that the government and other stakeholder should map out programmes that will sensitize majority of the Nigerian populace on the benefit of investing remittance money so as to become entrepreneurs, create job opportunities and become employers of labour. Keywords: International remittances, Private Investment, Unemployment, Two Stage Least Squares. DOI: 10.7176/JESD/12-1-05 Publication date: January 31 st 2021

Highlights

Background of the StudyUnemployment is a big problem which affects the productive capacity of a nation, bringing about underutilization of resources
Despite the significant flow of remittances into the country in the recent past, not much is known about the impact of these remittances on unemployment rate in the country, this study focused on examining the impact of international migrant remittances on unemployment in Nigeria using a multiple regression approach and a causality analysis
12.3 Evaluation of Research Hypothesis Evaluation of research hypotheses posed by the study suggests that: H01: There is no statistically significant relationship that exists between international migrant remittances and unemployment

Summary

Introduction

Unemployment is a big problem which affects the productive capacity of a nation, bringing about underutilization of resources. Unemployment is a situation in which those who fall within the age bracket of labour, who are willing and able to work, are idle instead of being engaged in productive activity. Most developing countries, including Nigeria, are passing through period of high unemployment rates despite the so-called “economic growth”. Unemployment has many consequences ranging from being a threat to peace and stability; increase in crime rate; reduction in investment; migration or brain drain; waste of human resources; poverty; low standard of living, and high dependency burden. In Nigeria, many people, especially the young ones consider migration as a panacea to economic problems because of the macroeconomic instability, unemployment, corruption and poor management of resources. At the same time, unskilled Nigerians with little education migrate abroad to work as cleaners, security guards, e.t.c. (Chukwuone, 2007)

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