HUMAN CAPITAL DEVELOPMENT AND UNEMPLOYMENT IN NIGERIA

AFOLAYAN, OLUFUNMILAYO TOPE and Covenant University, Theses (2021) HUMAN CAPITAL DEVELOPMENT AND UNEMPLOYMENT IN NIGERIA. Masters thesis, COVENANT UNIVERSITY.

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Abstract

Unemployment has remained persistent in Nigeria, despite government’s efforts at developing human capital through the rising school enrolments. This study examines human capital development and unemployment in Nigeria, while accounting for the relevance of measures of some environmental factors that enhance the capacity of the economy to absorb labour, using data that spanned the 1975-2017 sample periods. Specifically, it probes the effect of graduates’ turn-out (the adopted educational output measure, as proxy for human capital development), examines the impact of the measures of labour absorptive capacity on unemployment, and also investigates the nature of the interaction of government expenditures on education and health (as fiscal instruments), and its relevance in explaining unemployment. The study is premised on the Keynesian Framework, which hinges the remedy for unemployment on government intervention, through its fiscal operations for enhanced productive capacity and growth in employment. Through the adoption of the Autoregressive Distributed Lag (ARDL) technique of estimation, the Bounds testing approach establishes a long run relationship among the adopted variables in the model. Findings from the ARDL estimations reveal that the magnitude of the coefficient of graduates’ turn-out is lower and statistically significant, when the variables that capture the labour market absorptive capacity are incorporated, than when they are unaccounted for. This implies that, in the absence of these environmental factors, the annual turn-out of graduates significantly contributes to the rising level of unemployment in Nigeria. This finding shows that the presence of adequate labour absorptive capacity is able to create enough space, which partly absorbs the graduates’ turn-out effect, thereby lessen the number that would have been unemployed. Equally, the measures of the absorptive capacity are observed to be the major drivers of unemployment. This implies that the challenge of unemployment in Nigeria is more of the inadequacy of the factors, which enhance the economy’s capacity to absorb labour, and not necessarily that of graduates’ turn-out. Moreover, finding indicates that investments in education and health interact as complements, and that the interaction is statistically significant in explaining unemployment, during the period covered by the study. This suggests that the interaction of the two fiscal tools produces optimal outcome, than when implemented independent of each other. The study concludes that continuous turn-out of graduates, without the adequate provision of the factors that stimulate employment creation, will heighten the level of unemployment in the long run. Following the findings, specific policies that ensure the provision of adequate infrastructure necessary to create employment, thereby enhancing the nation’s capacity to absorb labour and improve the labour market position, are essential. These include, but not limited to the increase in capital stock, provision of sufficient access to and consumption of electric power, good monetary policy that ensures the reduction in the cost of borrowing, thereby enhancing the private sectors access to credits, should be embraced by the relevant authorities. Furthermore, proper policy coordination by the Ministries of Education and Health, relevant for optimality in the drive towards reducing significantly the current level of unemployment, is recommended.

Item Type:	Thesis (Masters)
Uncontrolled Keywords:	Baseline, capacity, graduates, interaction, Keynesian, unemployment.
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory
Divisions:	Faculty of Engineering, Science and Mathematics > School of Engineering Sciences
Depositing User:	Mrs Hannah Akinwumi
Date Deposited:	08 Jun 2021 11:45
Last Modified:	08 Jun 2021 11:45
URI:	http://eprints.covenantuniversity.edu.ng/id/eprint/14364

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