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Effect of Federal Government Expenditure on Unemployment in Nigeria: An Empirical Study

Chimeziri Augustina Ogechi 107 PAGES (16218 WORDS) Financial Management Technology Thesis
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ABSTRACT

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.

KEYWORDS: Federal Government Expenditure, Unemployment, Growth Rate of GDP, and Social and Community Service

CHAPTER ONE Introduction

  1. 1.1  Background of the Study -

  2. 1.2  Problem of the Study- -

  3. 1.3  Objectives of the Study- -

  4. 1.4  Research Questions- - -

  5. 1.5  Hypotheses - - - -

  6. 1.6  Significance of the Study- -

  7. 1.7  Scope of Study-- - -

  8. 1.8  Limitation of the Study- -

CHAPTER TWO
Review of Related Literature

TABLE OF CONTENTS

2.2 Conceptual Framework- -
2.1.1 Importance and Objectives of Public Expenditure - 15

2.1.2 Canons of Public Expenditure - - - - 16

2.1.3 Federal Government Classification of Expenditure -

2.1.4 Structural Unemployment- - - -

2.1.5 Hidden Unemployment- - - - -

2.1.6 Voluntary and Involuntary Unemployment-

2.1.7 Economic Costs of Unemployment - - - 2.1.8 Social Costs of Unemployment - - -

2.1.9 The Relationship Between Economic Growth Rate and Unemployment Levels - - -

2.2 Theoretical Framework - - - - -

2.2.1 Wagner Law of Increasing State Activities.-

2.2.2 Peacock – Wiseman‟s Theory of Expenditure

2.2.3 Ernest Engel‟s Theory Public Expenditure-

2.2.4 Marxist Theory of Unemployment - -
2.2.5 The Classical Theory of Unemployment - -
2.2.6 Unemployment in the Theory of Innovations - - 37 

2.2.7 The Keynesian Model of Employment Determination- 38

2.2.8 Theories of Government Expenditure-

2.2.9 The Philip‟s Curve: -

2.3 Empirical Framework -

CHAPTER THREE

  1. 3.0  Methodology- -

  2. 3.1  Introduction - -

  3. 3.2  Research Design-

  4. 3.3  Sources Of Data And Method Of Collection

  1. 3.4  Model Specification - - -

  2. 3.5  Data Analysis Techniques- -

3.5.1Least Square Regression Method -
3.5.2 Coefficient of Determination, R2 -
3.6.3 Joint Significance of Explanatory Variables (F-Test) 59

3.6.4 Individual Significance of Explanatory Variables (t-test) 59

3.6.5 Autocorrelation Test - - - -

3.7 Test for Data Properties - - - -

3.7.1 Test of Stationarity (Unit Root Rest) -

3.7.2 Co-Integration Test - - - -

3.7.3 Error Correlation Model - - - -

3.8 Granger Causality Test - - - -

CHAPTER FOUR

  1. 4.0  Data Presentation and Analysis - -

  2. 4.1  Presentation of Data- - - -

  3. 4.2  Test For Validity Of The Assumption Of The Model 69

4.2.1 Test for Co-efficient of Determination using Adjusted R2 74

4.3 Test For Individual Significance Using T-test- -

4.4 Testing For The Joint Significance (F-Test)- -

4.5 Test For Auto Correlation- - --- -

4.6 Discussion of Findings - - --- -

CHAPTER FIVE
5.0 Summary, Conclusion and Recommendations

5.1Summary- - -

  1. 5.2  Conclusion - - -

  2. 5.3  Recommendations - -

  3. 5.4  Suggested Area for Further

  4. 5.5  Contribution to Knowledge

    References- - - -

    Appendix 

 

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