Impact of Population Growth on the Unemployment Level in Nigeria (1981-2013)

Impact of Population Growth on the Unemployment Level in Nigeria (1981-2013)

CHAPTER ONE

1.0 Introduction

1.1 Background of the study

The alarming rate of population growth and unemployment in Nigeria currently calls for great concern among policymakers to formulate effective and efficient economic policies to arrest this ugly trend. In recent times, one of the greatest problems of population growth in Nigeria is not simply a problem of numbers, it is a problem of human welfare and development as rapid population growth can have serious consequences for the well-being of the citizenry. According to recent statistics made available by PMC (population media center, 2015) Nigeria is currently the 8th most populous country in the world with a population size of 182,201,962 and a population growth rate of 2.54 percent. It is expected that it will double in the next 28 years if left unchecked.

If development entails the improvement in people’s standard of living – their incomes, health, education, and general well-being – and if it also encompasses their self-esteem, respect, dignity, and freedom of choice as seen by ( Amartya Sen, 1999) then, the really important question about population growth is how does the Nigeria population growth contribute to, or detract from the chances of Nigeria realizing the goals of development, not only for the current generation but also for the future generations. Furthermore, how will Nigeria be able to cope with the vast increases in the labor force over the coming decades? Will employment opportunities be plentiful? Or will it be a major achievement just to keep unemployment levels from rising?

According to the National Bureau of Statistics, (2016) first quarter, the national unemployment rate was 5.5% and the labor force participation rate was recorded at 71.1%. The highest unemployment rate was among females (5.7%) compared to males (5.2%).

It is in the light of the foregoing issues in an attempt to answer these critical questions that this study tends to evaluate the impact of the population growth rate on the level of unemployment in Nigeria. This is because the population growth rate of a country remains a critical factor in the development of the economy and was not properly managed, which could inflate the scourge of poverty in the economy. On the other hand, population growth can be a useful factor in providing a workforce for the production of goods and services to boost economic development and remains a critical determinant of the potential of a country’s investment. It can act as a double-edged sword on the economy of that country.

Empirical evidence also indicates that rapidly growing population rate has serious implications for the provision of productive employment or decent work since rapid population growth is normally accompanied by a proportionate increase in the supply of the labor force; it means that the rate of job creation should match the rate of supply of the labor force.

Within the Nigerian context, the rate of labor force supply has outnumbered that of job creation, implying that the rates of unemployment or youth unemployment rate have been increasing rapidly. In other words, the number of people seeking employment increases more rapidly than the number of available jobs. This kind of situation poses a grave danger to society.

According to a research study carried out by (United Nations, 2006), they looked at the consequences of the High population growth rate on the unemployment level. Their research findings clearly show that when an ever-growing number of workers cannot be absorbed in the modern economic sectors of the country’s economy, the workers are forced either into unproductive service occupations or back into the traditional section with its low productivity and low subsistence wage levels. This large supply for cheap labor tends to hold back technological change, and industrialization is slowed by mass poverty, which in turn reduces the demand for manufactured goods. The results are low saving rates and low labor skills, both of which hinder the full development and utilization of natural resources, joblessness, frustration and disappointment, high rate of social vices and criminal activities such as robbery, prostitution, drug trafficking, underdevelopment trap, widespread of extreme poverty and hunger {absolute poverty), youth restiveness, if not controlled, apathy, cynicism, and revolution might also become the consequence.

1.2 Statement of the problem

Unemployment and increased population growth rates create serious social problems as discussed above. It not only affects the economic and socio-political life of the citizens of Nigeria but as well brings serious concerns to international organizations and donor agencies in tackling the problems discussed above and calls for concern to look into the policies put in place by policymakers in the country to checkmate and address this ugly trend in Nigeria.

The impact of population growth on the unemployment level in Nigeria has consequences not only to the present generation but also generations yet to come. According to the National Bureau of Statistics (2016), the Nigeria unemployment rate was recorded at 12.1 percent in March 2016, up from 10.4 percent in the last quarter of 2015, reaching the highest level since December 2009. The number of unemployed persons rose by 1.8 percent to 9.485 million, employment grew a meager 0.12 percent to 69 million and the labor force went up 2 percent to 78.4 million. Meanwhile, youth unemployment increased to 21.5 percent from 19 percent. The unemployment Rate in Nigeria averaged 9.04 percent from 2006 until 2016, reaching an all-time high of 19.70 percent in the fourth quarter of 2009 and a record low of 5.10 percent in the fourth quarter of 2010.

Rapid population growth in Nigeria is equally associated with unemployment with figures ranging from 17 percent per annum for the entire population to 60 percent for the youths because job opportunities are fewer than the number seeking for them and stagnating the economy. After all, a large proportion of available resources is consumed instead of being invested to generate growth.

The impact of population growth on the unemployment level in Nigeria has continued to draw conflicting conclusions among scholars because there is no agreement among scholars on the direction of causality between the impact of population and unemployment. This could generate problems among the policymakers when formulating policies for the Nation.

Furthermore, the different methodologies adopted by different researchers over the years also contribute to the conflicting submissions and inferences drawn among the scholars and this can create methodological problems for the upcoming researchers who may want to carry out further studies relating to this topic. For instance, some scholars and researchers through their findings indicate that there is a long-run, significant effect and causal relationship between population growth rate and unemployment level in Nigeria. While others show that there is no long-run, significant effect and causal relationship between population growth and unemployment level in Nigeria.

It is therefore the goal of this study to reconcile the conflicting views and perception of the various researchers and scholars in trying to identify if indeed, there exists a direct causal relationship, a significant effect, and a long-run relationship between population growth and unemployment level in Nigeria between 1991 and 2015

1.3 Aims and objectives of the study

This research aims to identify the impact of population growth on the unemployment level in Nigeria in terms of how it has affected the people as well as the economy for the period 1991 to 2015. To appraise the various alternative policy options available on the impact of population growth on Unemployment in Nigeria in other to provide the best policy recommendations. The specific objectives of this study are:

[1] To determine whether a long-run relationship exists between population growth and unemployment level in Nigeria

[2] To investigate the causal relationship between population growth and unemployment level in Nigeria

[3] To ascertain the statistically significant effect of population growth on unemployment level in Nigeria using Ordinary least square method in other to curb the problem of population growth rate and unemployment level in Nigeria.

· Relevant Research questions

1 What is the long-run relationship between the population growth rate and the level of unemployment in Nigeria?

· Is there any causal relationship between population growth and unemployment level in Nigeria?

· Does the population growth rate have a significant effect on the unemployment level in Nigeria?

1.5 Relevant Research Hypotheses

Hypothesis 1

H0: There is no long-run relationship between population growth and unemployment level in Nigeria.

H1: There is a long-run relationship between population growth and unemployment level in Nigeria.

Hypothesis 11

H0: There is no causal relationship between population growth and unemployment level in Nigeria.

H1: There is a causal relationship between population growth and unemployment level in Nigeria.

Hypothesis 111

H0: Population growth has no significant effect on the unemployment level in Nigeria

H1: Population growth has a significant effect on the unemployment level in Nigeria

1.6 Significance of the study

The significance of this study cannot be over-emphasized. Firstly, the study intends to evaluate the link between the population growth rate and the level of unemployment in the country. The Knowledge gained will be of immense benefit to policymakers as a framework to develop or design policies and strategies to curb the nagging issues of unchecked population growth rate and unemployment in the country.

The ultimate gain is that if population growth is properly checked and unemployment is successfully resolved, it will lead to an increase in the level of productivity in the country and also bring about an increase in the level of economic growth and development in the country and improve the standard of living of the citizenry.

Government and its agencies will find this research study useful because the findings that will be embarked on in this research will provide a blueprint for government policies towards the reduction of unemployment and to check population growth to educate the citizen on the importance of family planning.

1.7 Scope of the study

The scope of this study will be limited to the use of secondary data of population estimates from 1991 to 2015. It will also be limited to the study of unemployment trends within the year under review as mentioned above from the National Bureau of statistics, CBN statistical bulletin, and World Bank database. It is not concerned with the population growth rates and unemployment trends in the previous years. The Secondary data that will be gathered from the sources mentioned above will be used to test the stationarity of the data using unit root test (ADF) to avoid running a spurious regression result and run a regression result to test the statistical significance of the impact of population growth rate on unemployment level. The data will also be used to determine if there exists a long-run relationship between the impacts of population growth on the unemployment level using the Johansson co-integration test. Finally, the data will be used to confirm the causal relationship existing between the population growth rate and unemployment level in Nigeria using the granger causality test.

1.8 Definition of Terms

Absolute poverty: A condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information.

Development: Amartya Sen (1999), defined development as the removal of major sources of un-freedom, poverty, tyranny, poor economic opportunities, systematic social deprivation, and neglect of public facilities as well as intolerance or overstate activities of the state.

Decent work / productive employment: According to the Department of Economic and Social Affairs, (2006) Decent work involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men.

Economic growth: (Michael P. Todaro and Stephen C . Smith, 2011) Defined economic growth as a steady process by which the productive capacity of the economy is increased over time to bring about a rising level of National output and income.

Family planning: The practice of controlling the number of children in a family and the intervals between their births, particularly using artificial contraception or voluntary sterilization. According to WHO, Family planning allows individuals and couples to anticipate and attain their desired number of children and the spacing and timing of their births. It is achieved through the use of contraceptive methods and the treatment of involuntary infertility. A woman’s ability to space and limit her pregnancies has a direct impact on her health and well-being as well as on the outcome of each pregnancy.

Labor force/workforce: it is the total labor force that comprises people aged 18 and above who meet the International Labour Organization definition of the economically active population. All people supply labor for the production of goods and services during a specified period. It includes both the employed and the unemployed. While national practices vary in the treatment of such groups as the armed forces and seasonal or part-time workers, in general, the labor force includes the armed forces, the unemployed, and first-time job-seekers, but excludes homemakers and other unpaid caregivers and workers in the informal sector.

Labour force participation rate: The labor force participation rate, LFPR (or economic activity rate, EAR), is the ratio between the labor force and the overall size of their cohort (national population of the same age range). The term generally excludes the employers or management and can imply those involved in manual labor. It may also mean all those who are available for work

Underemployment: The condition in which people in a labor force are employed at less than full-time or regular jobs or jobs inadequate concerning their training or economic needs.

Unemployment rate: The unemployment rate is defined basically as the percentage of the total labor force that is unemployed but actively seeking employment and willing to work.

Unemployed Person: The International Labor Organization (ILO) defined an unemployed person as someone who is actively looking for work but does not have a job. The unemployment rate is a measure of the number of people who are both jobless and looking for a job. This measurement is considered a lagging indicator, confirming but not foreshadowing long-term market trends.

Unemployed population: This refers to persons in the working-age population, who during the reference week: (a) Were not employed, (b) Were available to take up work if such was found (c) Were actively looking for work during the previous 4 weeks. (National Bureau of statistics 2015)

Youth Unemployment rate: According to (MDGs, 2015), the youth unemployment rate is the proportion of the youth labor force that is unemployed. Young people are defined as persons aged between 15 and 24. The unemployed comprise all persons above a specified age who, during the reference period, were: (a) without work; (b) currently available for work, and (c) actively seeking work.

Supply of labor: The labor supply is the number of hours people are willing and able to supply at a given wage rate. It is the number of workers willing and able to work in a particular job or industry for a given wage. The extent to which a rise in the prevailing wage or salary in an occupation leads to an expansion in the supply of labor depends on the elasticity of labor supply.

Poverty: A poor man in Kenya Defined poverty as “Don’t ask me what is poverty because you have met it outside my house. Look at the house and count the number of holes. Look at the utensils and count the clothes I am wearing. Look at everything and write what you see. What you see is poverty. (Extracted from Todaro and Smith Economic development) .

Population growth rate: The “population growth rate” is the rate at which the number of individuals in a population increases in a given period, expressed as a fraction of the initial population. Specifically, population growth rate refers to the change in population over a unit period, often expressed as a percentage of the number of individuals in the population at the beginning of that period. This can be written as the formula, valid for a sufficiently small time interval.

References

Amartya Sen. (1999). Development as freedom Oxford. Oxford University Press.

Department of Economic and Social Affairs. (2006). Full and productive employment and decent work.United Nation.

Michael P. Todaro and Stephen C . Smith, M. (2011). Economic Development Eleventh. San Fransisco: Addison -Wesley, Pearson.

National Bureau of Satistics. (2016). Unemployment Statistics.

Population media center. (2015, July). Population media center. Retrieved from www.populationmedia.org

United Nation. (2015). The Millennium Development Goals Report. United Nation.

United Nations. (2006). Department of Economic and Social Affairs Office for ECOSOC Support and Coordination Full and Productive Employment and Decent. United Nations.