Open AccessUnemployment and Current Account Imbalances in Nigeria
Author(s) -
Ewere F.O. Okungbowa,
Adesuwa O. Erediauwa
Publication year - 2020
Publication title -
global business and economics anthology
Language(s) - English
Resource type - Journals
ISSN - 1553-1392
DOI - 10.47341/gbea.20127
Subject(s) - current account , economics , unemployment , full employment , balance of payments , unemployment rate , labour economics , exchange rate , macroeconomics
This study explores the link that exists between unemployment and current account imbalances in Nigeria from 1980 to 2014. It adopted the ARDL bounds test approach. The result gave evidence for a long-run relationship between the variables and also revealed a significant and inverse relationship between current account surplus and unemployment. Showing that a 1% increase in current account balances in favour of export will lead to a drop in the unemployment rate by 0.117893%. This, therefore, implies that current account deficit will cause a fall in employment and in turn a rise in the unemployment rate. Consequently, current account deficit leads to wage differentials in favour of the exporting countries as against importing countries, like Nigeria, and as such triggers a high rate of unemployment. We strongly recommend diversification of the country’s export-base which may increase employment opportunities and in turn reduce the unemployment rate. Keywords: Unemployment, Employment, Current Account Balances, Balance of payment, Output growth