FISCAL POLICY AND UNEMPLOYMENT IN NIGERIA

Abstract

This study examined the effect of fiscal policy on unemployment in Nigeria from 1990-2020. The objective of the study is to find out the relationship between chosen components of fiscal policy like recurrent expenditure, capital expenditure, debt servicing and some control variables like, inflation rate, interest rate spread, Gross Fixed Capital Formation on unemployment in Nigeria. the study used expo-factor research design with Auto Regressive Distributed Lag (ARDL) in analyzing the Data gotten from CBN Statistical bulletin 2020. however, it was observed from the results that, there is no significant relationship  between inflation rate and unemployment rate in Nigeria; there is no significant relationship  between interest rate spread and unemployment rate in Nigeria; there is no significant relationship  between government recurrent expenditure and unemployment rate in Nigeria; there is significant relationship  between government capital expenditure and unemployment rate in Nigeria; there is no significant relationship  between gross fixed capital formation and unemployment rate in Nigeria; there is significant relationship  between debt servicing and unemployment rate in Nigeria. Based on the findings, the study concludes that fiscal policy which entails the use of government expenditure in raising aggregate demand and output has a significant impact on unemployment rate in Nigeria. It was recommended that, Since Capital Expenditure has positive significant relationship with unemployment rate in Nigeria; government should intensify its roles in expanding its investment in capital expenditure for the reduction of unemployment rate in Nigeria; Recurrent expenditure of the government should be stimulated in such away that it creates employment opportunities along side solving infrastructural deficits problems in the economy; Since Debt servicing has positive and significant relationship with unemployment rate in Nigeria; government should intensify its activities in repayment of debts both domestic and foreign debts.