Impact of Temperature and Precipitation Anomalies on Unemployment

Abstract

This paper adopted econometric analysis to examine the impact of increased temperature and precipitation anomalies on unemployment. An annual time series data on Nigeria is obtained from 1991 to 2023, covering annual temperature anomalies, average precipitation anomalies and unemployment rate. Results obtained indicate that a 1 percent increase in temperature anomaly, raises unemployment by 0.006 percent, while a 1 per cent increase in precipitation anomaly raises unemployment by 0.008 in the short run. Similarly, a1 percent increase in temperature anomaly, raises unemployment by 0.28 percent, while 1 percent increase in precipitation anomaly, raises unemployment by 0.7 per cent. These anomalies and their resultant risks are likely to slow down productivity and output. Accordingly, as climate related risks have different frequency and temporal distribution compared to other types of risks, taking these risks from a policy perspective requires concerted effort and leadership. Policy makers ought to ensure that adverse effects of climate change touches jobs and the economy in a positive way. It is therefore imperative to strengthen leadership and innovation around macroeconomic policies to integrate climate adaptation and mitigation strategies into the mainstream economic policy objectives. Thus, to achieve a long-term sustainable growth, economic policies should combine the trio-goals of employment generation, economic stability and environmental sustainability.