The Impact of Unemployment Rate on Productivity Growth in Nigeria: An Error Correction Modeling Approach

Abstract

This paper examined the relationship between unemployment rate and productivity growth in Nigeria for the period 1986 to 2010. The study utilized co-integration and error correction model approach. Although the unit root tests showed that the variables were integrated of different orders, the Johansen co-integration result showed that the variables were co-integrated. The regression estimate based on the short run and long run models showed that unemployment rate has an insignificant influence on productivity growth in Nigeria over the study period. Based on these findings, this study recommended that there is still the need for government to take urgent steps against the rising unemployment rate, because unemployment is a major impediment to social progress and results in waste of trained manpower.

Keywords: Unemployment, Error correction modelling, Productivity growth