Nexus between Unemployment and Economic Growth in Nigeria: New Empirical Insight from an ARDL Approach

Abstract

Objectives: This study re-examines the unemployment-growth relationship in Nigeria from 1986 to 2024, with emphasis on persistent jobless growth and the structural composition of economic expansion. Prior Work: It addresses mixed evidence in earlier Nigerian studies and limitations arising from shorter samples and narrow model specifications. Approach: Annual data are analysed with an Autoregressive Distributed Lag (ARDL) bounds-testing framework incorporating domestic credit, labour force participation, foreign direct investment, and inflation to capture short- and long-run dynamics. Results: The bounds-test F-statistic of 4.345063 exceeds the 5% upper bound, confirming cointegration. Unemployment is statistically insignificant in both the short and long run; inflation has a negative long-run effect; lagged foreign direct investment has a significant short-run negative effect; and the error-correction coefficient of -0.900010 indicates rapid adjustment to equilibrium. Implications: Structural rigidities and macroeconomic instability appear to constrain employment-rich growth. Value: The study extends evidence on Nigeria using a longer sample and a broader dynamic specification, supporting policies that promote labour-intensive diversification and macroeconomic stability.