JOBLESSNESS IN THE MIDST OF RICHES: WHAT FACTORS REINFORCE THE RESOURCE-CURSE SYNDROME IN NIGERIA?

Abstract

Despite the large inflow of government revenue through crude oil sales, unemployment rate still soars, and Nigeria’s inability to fully utilize its potentials has been cited as the basis for its recent economic recession. Our paper investigates the impact of oil revenue on unemployment situation in Nigeria in an attempt to provide current empirical evidence for Nigeria’s resource-curse syndrome. Based on the Keynesian theory of output, income and employment, we estimate a dynamic multivariate autoregressive distributed lag (ARDL) model using Nigeria’s quarterly time series data for the period 1991Q1 to 2016Q4. I n addition to capturing the dynamic characteristic of oil revenue-unemployment relation, the model also allows for oil revenue interaction with institutional framework and corruption tendencies as defined respectively by quality of institution and corruption perception indexes. We find positive impacts of oil revenue on unemployment for the first and second quarters after which it turned negative in the third quarter. We also find that weak institutions and high level of corruption reinforces resource -curse syndrome in Nigeria. We therefore conclude that building strong institutions is a prerequisite for quelling the negative effect of oil revenue on unemployment.