THE DYNAMICS OF UNEMPLOYMENT AND POVERTY REDUCTION IN NIGERIA: APPLICATION OF CO - INTEGRATION AND CHOW TEST OF STABILITY [1992 - 2022]

Abstract

This paper is an attempt to investigate empirically, the long run relationship between Unemployment and Poverty Reduction in Nigeria for the period, 1992 to 2022; A Cointegration and Chow Test of Stability approach. The main objective was to evaluate the impact of one of these macroeconomics variables – unemployment on poverty reduction in Nigeria, through the maintenance of full employment. Basically, we investigate and analyzed the impact of unemployment on poverty reduction and established the level of stability of variables over the period studied. For the achievement of these aims, we put forward and specified models, with variables such as; poverty reduction proxy by Gross Domestic Product Per-Capita [GDPPC], Money Supply [MOS], Domestic Credit [DCR] and Lending Rate [LER]. The econometrics methods of Cointegration to establish the extent of significance of the variables was used by carrying out a Unit Root Test.  Given the empirical results, it was establish that some of the apriori expectations were inconsistent in the estimation. At the long-run, the results show to some extent that the level of impact of unemployment conditions, here, referred to as; [dynamics of unemployment ], on poverty reduction in Nigeria adjust rapidly fairly well to changes in the explanatory variables, indicating that the variables are cointegrated. The Chow Test of Stability shows that, unemployment conditions in Nigeria have been stable over the period. Conclusively, based on our results, appropriate policy recommendations were made which include that; since unemployment is positively and significantly related to poverty reduction, government should adopt good policies that are associated with unemployment reduction such as; industrialization policy, provision of adequate vocational training  centers to equip the youth in particular for self- employment, provision of micro-credit/micro-finance facilities, thus encouraging small scale, entrepreneurial schemes among others, with a view of checking poverty in the country.