IMPACT OF FISCAL POLICY ON URBAN UNEMPLOYMENT IN NIGERIA

Abstract

One of the central macroeconomic objectives is the attainment of full employment or low unemployment. Constantly, economic policies are designed to steer the economy to the path of steady state equilibrium that guarantees natural rate of unemployment. Overwhelming evidences suggest that fiscal policy could be a veritable tool for tackling unemployment in emerging and developing economies. Although Nigeria has implemented (and continued to implement) different stances of fiscal policy, the urban unemployment crises has continued to plague Nigerian economy. To this effect, this study sought to examine the impact of fiscal policy on urban unemployment in Nigeria. Specifically, the study investigated the impact of government spending, government revenue, fiscal deficit and public debt on urban unemployment in Nigeria. Using time series spanning from 1981 to 2018, the study estimated generalized linear model (GLM). The results obtained show that capital expenditure and government revenue have significant negative impact on urban unemployment in Nigeria. Also, recurrent expenditure and fiscal deficit were found not to exert significant impact on urban unemployment within the period. However, public debt reinforces unemployment in urban centres in Nigeria. The study therefore recommended that the Nigerian government reconsiders increased budgeting and releases of fund for capital expenditure while cutting its ever bulging personnel cost. Since urban unemployment is sensitive to revenue changes, it was also recommended that government should make effort to stabilize its revenue sources so as to ensure smoothened revenue accretion over the periods.