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Youth unemployment in Nigeria: nature, causes and solutions

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Abstract

This study investigates the nature and causes of youth unemployment in Nigeria, with the aim of proffering evidence-based workable solutions as policy recommendation. Its contribution to the literature on youth unemployment is the joint examination of the nature and causes of youth unemployment, which gives a holistic view and provides sufficient background for designing holistic solutions to the problem of youth unemployment in Nigeria. The study employs a Vector Autoregressive (VAR) model. This describes the spillovers of youth employment among different sectors (Agriculture, Industry and Services) in Nigeria; thus, explains whether the nature of youth unemployment in Nigeria is frictional or not. The study also adopts Panel Autoregressive Distributed (PARDL) model to analyze the short-run and long-run significance of the determinants of youth unemployment, such output level, macroeconomic uncertainties and labour market flexibility. This helps to determine the main causes of youth unemployment in Nigeria and whether the youth unemployment is cyclical or structural in nature. The results suggest that the nature of youth unemployment in Nigeria is non-cyclical, partly frictional, but largely structural. This may explain why youth unemployment is increasing in Nigeria despite government remedial efforts; as government focused on frictional youth unemployment remedial policies and dispelled the potential of youth unemployment being structural in nature. The recommended solutions are fiscal and monetary policy easing and demand-side subsidy programme to dealing with structural youth unemployment. The study also shows the need to enforce relevant extant labour laws and regulations to stem the tide of youth unemployment and underemployment in Nigeria.

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Fig. 1

Source World Development Indicator (WDI) database

Fig. 2

Source World Development Indicator (WDI) database

Fig. 3

Source World Development Indicator (WDI) database

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Data availability

The data that support the findings of this study are openly available in the Central Bank on Nigeria (CBN) database at http://statistics.cbn.gov.ng/cbn-onlinestats/DataBrowser.aspx; Fred Louis data base https://fred.stlouisfed.org/searchresults?st=Nigeria+Real+Exchange+Rate; World Bank database at https://databank.worldbank.org/source/world-development-indicators and Fraser Institute at https://www.fraserinstitute.org/economic-freedom/dataset?geozone=world&page=dataset&min-year=2&max-year=0&filter=0

Notes

  1. Unemployment, youth total (% of total labor force ages 15–24) (modeled ILO estimate)—Retrieved July 28, 2019.

  2. See https://reliefweb.int/report/world/global-terrorism-index-2018.

  3. See https://www.bbc.com/pidgin/tori-46459641.

  4. See Premium Times, https://www.premiumtimesng.com/news/top-news/241160-nigeria-ranks-3rd-global-internet-crimes-behind-uk-u-s-ncc.html.

  5. The panel ARDL model may also be referred to as non-stationary heterogeneous panels (see Li et al., 2016; Salisu and Isah, 2017).

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Acknowledgements

Comments from the Editor and three anonymous reviewers are gratefully acknowledged. The authors also acknowledge the intellectual contributions of Tirimisiyu F. Oloko, Ahamuefula E. Ogbonna, Idris A. Adediran and Kazeem O. Isah.

Funding

The authors wish to acknowledge the research support received from the Tertiary Education Trust Fund (TETFund) of the Nigerian Government, under the Research Fund (RF) Project (2019).

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Authors and Affiliations

  1. University of Ibadan Laboratory for Interdisciplinary Statistical Analysis [UI-LISA], Department of Statistics, University of Ibadan, Ibadan, Nigeria

    Olusanya E. Olubusoye

  2. Centre for Econometrics and Applied Research (CEAR), Ibadan, Nigeria

    Olusanya E. Olubusoye, Afees A. Salisu & Sam O. Olofin

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Table 7 Hausman test for model selection
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Table 8 PMG estimation results (robustness)
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Olubusoye, O.E., Salisu, A.A. & Olofin, S.O. Youth unemployment in Nigeria: nature, causes and solutions. Qual Quant 57, 1125–1157 (2023). https://doi.org/10.1007/s11135-022-01388-8

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