HUMAN CAPITAL DEVELOPMENT AND EMPLOYMENT GROWTH IN NIGERIA
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- NGN 3000
ABSTRACT
Employment growth is an important macroeconomic objective of government as decline in employment signifies waste of resources and decline in welfare. Much emphasis has been laid on the importance of developing human capital in line with the emerging realities in the contemporary labor market. The study specifically sought to uncover short-run and long-run effects of education and health investments on employment and to determine the nature of causality existing between the human capital development indicators and employment growth in Nigeria. The study used annual time series data from 1981 to 2019 and tested for unit root in the series using the Augmented DickeyFuller (ADF) and Phillips-Perron (PP) tests. In order to examine short-run and long-run effects, an ARDL model is estimated while a TY-VAR model is estimated to examine causality with the aid of Granger causality tests. The findings of the estimated ARDL model showed that the human capital development (measured as the human capital development index) has statistically significant influence on employment growth both in the short-run and in the long-run. The result of the Toda-Yamamoto Granger causality test support causality from employment to human capital but not vice versa. On the other hand, unidirectional causality was found from inflation to human capital development and from inflation to real wage. Human capital was found to Granger cause real wage but only at the 10 percent level. The study recommends improvement on existing quality of education and incentives to improve quality of delivery in the education sector in order to raise overall productivity and employment.
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