Version 1
: Received: 11 December 2018 / Approved: 12 December 2018 / Online: 12 December 2018 (11:44:03 CET)
How to cite:
Adenomon, M.O.; Okoro-Ugochukwu, N.A.; Adenomon, C.A. On the Determinants of Unemployment Rate in Nigeria: Evidence from Fully Modified OLS and Error Correction Model. Preprints2018, 2018120143. https://doi.org/10.20944/preprints201812.0143.v1
Adenomon, M.O.; Okoro-Ugochukwu, N.A.; Adenomon, C.A. On the Determinants of Unemployment Rate in Nigeria: Evidence from Fully Modified OLS and Error Correction Model. Preprints 2018, 2018120143. https://doi.org/10.20944/preprints201812.0143.v1
Adenomon, M.O.; Okoro-Ugochukwu, N.A.; Adenomon, C.A. On the Determinants of Unemployment Rate in Nigeria: Evidence from Fully Modified OLS and Error Correction Model. Preprints2018, 2018120143. https://doi.org/10.20944/preprints201812.0143.v1
APA Style
Adenomon, M.O., Okoro-Ugochukwu, N.A., & Adenomon, C.A. (2018). On the Determinants of Unemployment Rate in Nigeria: Evidence from Fully Modified OLS and Error Correction Model. Preprints. https://doi.org/10.20944/preprints201812.0143.v1
Chicago/Turabian Style
Adenomon, M.O., N. A. Okoro-Ugochukwu and C. A. Adenomon. 2018 "On the Determinants of Unemployment Rate in Nigeria: Evidence from Fully Modified OLS and Error Correction Model" Preprints. https://doi.org/10.20944/preprints201812.0143.v1
Abstract
This study employed the Fully Modified Ordinary Least Squares (FMOLS) and the Error Correction Model (ECM) to investigate the long-run and short-run determinants of unemployment rate in Nigeria. To achieve this annual data on unemployment rate, inflation rate, interest rate, exchange rate and population growth from 1981 to 2016 was collected from Central Bank Statistical Bulletins and the World Bank website. The ADF test revealed that the macroeconomic variables are stationary at first difference while the Cointegration test revealed that the variables are cointegrated. Using unemployment rate as dependent variable, the FMOLS model revealed that exchange rate and population growth are positively significantly related to unemployment rate, interest rate and inflation rate were negatively related to unemployment rate but only interest rate was significant. The short run relationship revealed that the coefficient of the ecm(-1) is negative and statistically significant at 5% level indicating that the system corrects its previous period disequilibrium at the speed of 48.93% yearly. This study concludes that high exchange rate and population growth can lead to increase in unemployment rate in Nigeria while the government should develop the industrial sector and non-oil sector in order to generate employment and boost export in Nigeria.
Keywords
Determinants, Unemployment Rate, OLS, FMOLS, ECM
Subject
Computer Science and Mathematics, Probability and Statistics
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
