The Impact of Fiscal Policy on Unemployment in Nigeria

Abstract

The study examined the impact of fiscal policy on unemployment in Nigeria. The main objective of the study is to find out the relationship between fiscal policy like recurrent expenditure, capital expenditure, debt servicing and some variables like inflation rate, interest rate spread, gross fixed capital formation on unemployment. The study used expo-factor research design with Auto Regressive Distributed Lag (ARDL) in analyzing the data collected from CBN statistical bulletin. The result revealed that government capital expenditure, gross fixed capital formation and debt servicing impacted significantly on unemployment, while inflation rate, interest rate and recurrent government expenditure had insignificant impact on unemployment. Based on the findings, the study concludes that fiscal policy has a significant impact on unemployment. It was recommended that government expenditure should be channeled towards productive sectors which are capable of absorbing the teeming unemployed in the society and not luxuries and stop further acquiring more loans.