Open AccessEmpirical Cost of Electricity Outage on Labour and Capital Productivity in Nigeria
Author(s) -
Osinachi Iroh,
Ijeoma E. Kalu,
Alwell Nteegah
Publication year - 2022
Publication title -
applied journal of economic managemnet and social sciences
Language(s) - English
Resource type - Journals
ISSN - 2811-1613
DOI - 10.53790/ajmss.v3i1.23
Subject(s) - electricity , productivity , economics , total factor productivity , electricity generation , population , mains electricity , production function , ordinary least squares , labour economics , production (economics) , agricultural economics , econometrics , power (physics) , microeconomics , economic growth , engineering , physics , demography , quantum mechanics , sociology , electrical engineering
This study empirically examined the impact of electricity power outages on Nigeria’s capital and labour productivity. The emphasis is on how frequent electricity outage reduces labour and capital effectiveness and other factors of production. To achieve the above objective, annual time series data on Total Factor Productivity - a proxy for Nigeria’s factors productivity, Power Outage (electric power transmission and distribution losses as % of output), and other controlled variables were used to estimate the relationship and all data were from World Bank Development Indicators (WDI). The Fully Modified Ordinary Least Square (FOLS) technique was adopted for analysis. The empirical results showed a negative relationship between power outages and factor productivity. The result also reveals that electricity pricing has a significant negative impact on the factor productivity while both electricity generation and population have a significant positive impact on Nigeria’s total factor productivity. The implication is that the substitution effect between labour and capital is positive, meaning that Nigeria exhibits a labour-intensive production function. In conclusion, the study is of the opinion that power outage and electricity pricing negatively impact factors productivity while electricity generation and population have a positive relationship with factors productivity in Nigeria.