Nexus among Inflation, Unemployment and Poverty in Nigeria: Empirical Evidence

Abstract

Despite Nigeria’s enormous growth, living standards for the majority of its citizens have been steadily getting worst, with falling real wages and a complete dearth of jobs. The association among inflation, unemployment and poverty in Nigeria was examined in this study from 1981 to 2023. Using the ARDL model, findings reveals that a long-run relationship does not exist among the variables over the period under study. The short-run regression result revealed that unemployment, inflation and income inequality exerted a positive relationship with poverty. Furthermore, the causality results showed the presence of bidirectional causality between income inequality and poverty while a unidirectional causality runs from inflation to poverty without a feedback effect in Nigeria. However, there is no causal link between unemployment and poverty. The study, therefore, concludes that the alarming rate of poverty in Nigeria is majorly caused by inequality in income. Consequently, it suggests that the policymakers of the government should design and implement redistributive fiscal policies and efficiency improving programmes (like higher spending on key public services such as education, health and social protection) that will improve access of the low-income families to essential goods and services, as this would reduce income inequality and as well reduce the number of poor people in the long-run.