EFFECT OF FEDERALGOVERNMENT EXPENDITURE ON UNEMPLOYMENT IN NIGERIA: ANEMPIRICAL STUDY

AUTHOR: CHIMEZIRI, AUGUSTINA OGECHI (MSc)

DEPARTMENT: Financial Management Technology

SCHOOL: School of Management Technology (SMAT)

AFFILIATION: Federal University of Technology Owerri

This study on the Effect of Federal Government Expenditure on Unemployment in Nigeria for the period of 1981 to 2014 was carried out in order to find out how federal government expenditure affects unemployment so that measures can be taken to reduce unemployment that has been growing rapidly and has posed a big problem in the country. The independent variable is made of Federal Government Expenditure on Administration, economic service, social and community service, and transfer together with growth rate of Gross Domestic Product. The data were collected from Central Bank of Nigeria bulletin, Bureau of statistics and World Bank bulletin. Using ordinary least square technique on e-views version 7, data were tested and empirically analyzed. From the result analyzed, we found out that federal government expenditure variables jointly affected unemployment in Nigeria but specifically, Federal Government Expenditure on economic services proved to reduce the unemployment more than the other variables. We also empirically deduced that a percentage increase in the federal government expenditure on economic service, administration, and growth rate of Gross Domestic Product decreased on unemployment while a percentage increase in federal government expenditure on social and community service, and transfer increased on unemployment. From the causality analysis, federal government expenditure on administration and unemployment granger cause (affect) each other. The result from the co- integration analysis showed that a long-run relationship existed among the variables. Based on the findings, recommendations were made which include that federal government should increase its expenditures on economic service, administration, growth rate of Gross Domestic Product and reduce its expenditures on social and community service, and transfer. Thus this will create employment which will enhance the welfare
of the citizens and also lead to increase in the nations‟ Gross Domestic Product.
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