IMPACT ANALYSIS OF SUBSIDY AND TRANSFER PAYMENTS ON RATE OF UNEMPLOYMENT IN NIGERIA, 2010-2021: AN EMPIRICAL INVESTIGATION

Abstract

This paper examines the link between subsidy, transfer payment and unemployment rate in Nigeria.  Removal of subsidy on fuel and governments transfer payments have caused a lot of rift in the country hence, this is a research into the effect of this variables on the hydra headed rate of unemployment in the country.  Time series data used in the study were sourced from the World Bank Data Bank for 2022.  The source proves to be more reliable and valid for data on macroeconomic variables. Ordinary Least Square Statistical technique is adopted in the analysis.  Though the treatment variables included in the analysis have about 92 percent explanatory power on the variation in unemployment rate in Nigeria, the results of the analyses reveal that government expenditure on subsidy and transfer payments do not impact significantly on unemployment rate.  Having a negative relationship at 5 percent level of significance as expected, the study shows that a one percent increase in subsidy and transfer payment in Nigeria will reduce the unemployment rate only by 2 percent. The study therefore recommends among others that government expenditure on subsidy and transfer payments is not the best policy option for achieving job creation in the country at this critical period of high unemployment rate and should therefore be abrogated.