REAL WAGES, INFLATION AND UNEMPLOYMENT NEXUS, IMPLICATION ON WELFARE IN SUB SAHARAN AFRICA

Abstract

This study examines the welfare implication of the real wages, inflation and unemployment nexus, in sub-Saharan Africa countries from 2001 to 2020. The goal of this study is to analyze the role of wage rate in the impact of inflation and unemployment on household welfare in SSA. The study adopted Equal Satisfaction Capacity theory by Pigou as the theoretical framework, while the Panel GMM was employed in the estimation of the variables. The results showed that wage rate, population, and exchange rate have a positive and substantial relationship with household consumption and hence welfare, but inflation, unemployment, and government capital spending had a negative but significant relationship. Furthermore, government final consumption spending have a negative and significant relationship. The study made the following recommendation; the effective employment of macroeconomic policy tools in the control of inflation, increase in employment rate through a joint public private partnership in the creation of employment, full encouragement of entrepreneurial activities as well