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The Impact Of Unemployment On Economic Growth In
Nigerian
ABSTRACT
This study is designed to investigate on the impact of
unemployment on the Economic growth in Nigeria for the period of 26 years
(1981-2008). This is done in other to find out its influence on the persisted
occurrence of unemployment among the Nigeria youths and stagnates the growth of
the economy. It focuses on those objectives.
1) To determine
the relationship between unemployment and economic growth in Nigeria.
2) To ascertain
the magnitude of this relationship the study also tested for two hypothesis.
The data for the study was obtained from the Central
Bank of Nigeria statistical bulletin on gross domestic product (GDP). The major
findings were that unemployment contributes negatively to the Gross Domestic
product (GDP) while government expenditure contributed positively to Gross
Domestic product some recommendations were made based on the finding.
CHAPTER ONE
1.1
BACKGROUND OF THE STUDY.
Unemployment is generally agreed to be a symptom of
macroeconomic illness which could be “Voluntary” or “involuntary “. When it is
said to be voluntary, one means a condition where somebody chooses not to work
because they have means of support other than employment. Example of such is an
Idle rich man. On the other hand, involuntary unemployment exist when one is
willing to work and able to work at the prevailing rate of pay but unable to
find work (Anyanwu 1995).
Base on this, unemployment has different types such
as frictional, seasonal,
cycling, structural and technological unemployment. The frictional unemployment occurs as a result
of a few processes such as:
1. Labour
immobility: people move from one job to
another either by loosing one of finding another ( vakrm 2007).
2. Labour
force expansion: Every year there are new entrants to the labour force and this
increases the number of people that are unemployed.
The frictional
types of unemployment exist when there is lack of adjustment between demand and
supply of labour. This may as a result of knowledge on the part of employers
about the availability of works or on the part of workers that unemployment
exists on a particular place. It is also caused by lack of necessary skills for
a particular job, labour immobility, break down of machinery shortage of raw
materials etc. the period of unemployment between loosing one job and finding
another is also included under frictional unemployment.
CYCLICAL UNEMPLOYMENT: It arises due to cyclical
fluctuations in the economy. This may also be generated by international force.
A business cycle consists of alternating periods of boom and depression. It is
during the downswing of the business cycle that income and output fall leading
to wide spread unemployment (Vakrm 2007).
SEASONAL UNEMPLOPYMENT: This result from seasonal
fluctuations on demand. Employment in ice factories is only for the
summer. Similarly the ice-cream sellers
remain unemployed during winter and destruct sellers duringsummer. The same is
case with harvesting and sowing, farmers remain idle and unemployed for the
rest of the year.
In Nigeria,
unemployment is regarded as one of the most challenging economic problem facing
the federal government and economy as a whole. Although, there are variations
in the measurement of unemployment, official estimates show their result as
follows: from
1985 – 2003, the data shows a high fluctuation trend
for both the urban and rural sectors of the economy. From the data the 1985
figure shows the percentage of the national, urban and rural employment as
follows: National, 6.10%, urban 9.8% rural 5.2% and in a the year figure is as
follows: National 3% urban 3.5% and rural 2.7% (CBN 2004).
The
rising rate of population of the country which is faster and higher than the job
of opportunities, a situation in which birth rate is rising, death rate is
falling and the population growth rate is between 2.5% and 3% unemployment is
bound to exist. There had been also a total neglet of able bodied youths from
the rural to urban areas in search of none existing white colar jobs.
1.2
STATEMENT OF THE PROBLEM:
Unemployment has reduced a very alarming proportion in
Nigeria, with a great number of unemployment being primary and secondary school
learners and university graduates. This situation has recently been compounded
by the increasing unemployment of professionals, such as bankers, engineers and
doctors. The tool is within the productive segment of the Nigeria population
(vision 2010).
The extent
of unemployment in Nigeria is not justified by the available financial
statistics on the phenomenon. This is because of the nature of unemployment in
the country where many job seekers do not see the need for registrations as
unemployed due to expression of futility on each exercise.
This
enhances a sharp disparity between the official statistics on the phenomenon
and the reality on ground (Bello 2003). Disguised unemployment otherwise known
as concealed unemployment is a situation where people are available for work
than is shown in the unemployment statistics (Bannock et al 1998).
The problem of disguise unemployment is quit acute in
Nigeria.
This explains
why official unemployment statistics sharply differ from the true state of
unemployment or unofficial statistics available. The record figure for
unemployment significantly understates the number of people who are actually
willing to work at the existing set of wage rate. Consequently, the
unemployment figure in Nigeria is obtained through Labour force Sample survey,
by asking if the person has worked in the past week preceding the survey.
Unemployment situation of a labour not having enough paid work or not
doing work that makes full use of his skills and abilities can be measured by
numbers of hours worked per week. Generally, in Nigeria, the official period of
working tenure per week in forty hours which many workers fall short of due to
non availability of work. In some instances available work is rationed
especially among the low skilled workers and casual labourers in the formal
sectors. The situation on the informal sector tends to be worse (Bello 2003)
therefore, the major problem we have in Nigeria is in terms of unemployment.
The official figures of rate of unemployment from December 1999 indicated
a total of 27.6% and 27.8% unemployment
rate for male and female respectively.
The 2000
figure saw the rate for male increasing slightly to 32. 4% with slightly
decrease in female unemployment to 26.4% the break down shows that the
secondary school leaves to be worse hit by the unemployment exercise. In
December 1998, a total of 66.3% of male and 62.0% of female unemployment were
recorded at the urban centers while the rural central had an estimate of 47.1%
and 45% male and female job seekers respectively. As at December 1999, school
leavers unemployment rate had risen to 67.0% for male and 68.8% for females in
the urban centre while rural centre was as high as 59.1 and 55.7% for male and
female respectively (Bello 2003). For polytechnic and university graduates, the
figure shows relatively low unemployment rate as compared o the school leavers’
experience. For instance, during theperiod under investigation a peak of 14.%
rate of unemployment was recorded for polytechnic female graduates in 1998
which the male graduates records had its peak in 1999 with 15.0% points in
urban areas (Bells 2003). The graduate unemployment route in the urban centre
had 8.5 percent record in September 1999 for males and 4.5% in June 1999 for females
during the period (Bello 2003).
Many people
are frustrated by lack of employment opportunities. They include those without
work and those who have jobs but want to work longer hours or more intensively.
A considerable size of utilized and under utilized labour abounds in Nigeria
and which ought to be brought into the circle. These show that Nigeria
employment problem has become chronic and interactable and should be a matter
of utmost national concern.
1.2
OBJECTIVE OF THE STUDY
The overall objective that will guide the study is as
follows:
1.
To determine the relationship between unemployment and Economic growth in Nigeria.
2.
To ascertain the magnitude of the relationship
1.2
TEST OF TYPOTHESIS:
The
test hypothesis that would guide the work is as follows:
1.
HO: That unemployment does not
affect the economic growth inNigeria
2. HI: That unemployment affects the economic
growth in
Nigeria.
1.5
SIGNIFICANCE OF THE STUDY:
One of macroeconomic goals of any country is the actualization of full
employment.Therefore unemployment n any system is seen as a policy failure and
the concerted effort on the part of
thegovernment in checkmating the impact
of unemployment is important to the
policy makers, politicians and students of economics.
To
the policy makers, ascertaining the rate of unemployment in an economy would
help in their effort in mapping out policies that would bring the economy to
the desired height. The policy makers with the knowledge of the state of
unemployment on the system stands the best chance of controlling it through
appropriate initiatives like poverty eradication programmes and creation of
employment opportunities that touches the lives of the population
1.6 LIMITATION OF PROVIOUS STUDIES:
The impact of unemployment and economic growth are
derived from the advanced economic right, for its original version of Taylor’s
curve to okon’s law in the U.S.
However,
other works that focus on the developing countries especially in Nigeria have
differed considerably in their methodological approach while Simbowole 2003
used econometric approach that spine from 1960 – 2000.
In a related
investigation by Ajecomobi and Ayenwale (2005) their main focus was on sectoral
government expenditure and unemployment. It can be seen that little or more
information have been provided by previous studies on the supposed relationship
if they exist between economic growth and unemployment especially during this
reform period. This forms a point of departure for this present study as the
scope will include 1981 – 2008. Also the present study will focus on the
relationship between unemployment and output growth to determine using a
tripartite ordinary least square method which differ from the previous studies
given the fact that economic reforms that has taken place from 1990 till date
have significance effect both on unemployment and output and as such affect
their supposed relationship.
Levin and
Wright (2000) use annual data to find that unemployment create impact on output
growth ratio without finding the significant relationship and that unemployment
has negative relationship with output growth which this will look at using time
series data in regression analysis that range between 1981 – 2008. Based on
this research, work, one can see that unemployment is due to rate of the
population of the country that is higher than the job opportunities Osinubi(2006) used time series data for 38
years (1970 – 2008)for relationship between poverty, unemployment and economic
growth in Nigeria without finding the cause of the problem. But from this
present work, one can see that unemployment is due to gross mismanagement
excess spending and adverse policies of government of Nigeria.
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