Poverty and Unemployment Paradox in Nigeria

Abstract

Despite Nigeria's rich endowment with natural resources, its poverty profile presents a sombre picture of a rich nation in decline. Also, the rate of unemployment is high and has been seen to take an increasing turn in form of youth unemployment. Indeed, Nigeria presents a paradox. The country is rich but the people are poor. This study therefore intends to determine the nature of the relationship between poverty and unemployment over the period 1977-2010 in Nigeria, and to ascertain the causal link (if any) between poverty and unemployment. In achieving this, the co-integration, error correction modeling and causality test were employed. The study discovered that each and all of the explanatory variables significantly affect poverty and that a long run relationship exists among the variables of the model that, unemployment has a positive influence on poverty while government investment on infrastructures and human investment has a negative influence on poverty. Furthermore, there is no causal link between poverty and unemployment. The study recommended that government should intensify the provision of infrastructures and making and implementation of appropriate polices which will create a conducive environment needed for investment to thrive.