An assessment of inclusive growth policy as a determinant of unemployment reduction in Nigeria: An application of autoregressive distributed (ARDL) bound test approach

Abstract

This study investigated the relationship between inclusive growth and unemployment rate for the period 1970 to 2018. Autoregressive Distributed Lag (ARDL) bounds test approach was adopted for estimation. The study established the long-run relationship between measures of inclusive growth and unemployment. The inclusive growth was accounted for by measuring the influence of inclusive growth policies or programmes on growth in agricultural, manufacturing and industrial sectors within the periods of the study. Hence, estimating the short and long-run dynamics, agricultural, manufacturing and industrial sectors serves as measures of inclusive growth proxied with real agricultural output, real manufacturing output and real industrial output respectively. Also, we accounted for the influence of removal of trade restriction on unemployment with openness, measured by export as percentage of real gross domestic product to unemployment rate. From the empirical findings, the results revealed that growth in agricultural and industrial sector exert negative and significantly relationship with unemployment rate. This suggests that policy initiatives or programmes targeted at promoting inclusive growth will result to growth in agricultural and industrial sector and increase in job creation, economic activities and out-put. Further investigation show that growth in manufacturing sector and openness has no significant relationship with unemployment. From the findings, this study therefore inferred that inclusive growth is a panacea for unemployment as well as an incentive for job creation. To this effect, the study suggests that the government authorities should initiate and implement policies that will promote entrepreneurial development, skill acquisition and empowerments programmes in the country.