Analysis of the Effects of Government Expenditure on Employment Generation in Nigeria

Abstract

Government spending pattern is not only projected to guarantee stabilization but also to spur economic growth and expand employment opportunities. Therefore, the study examines the impact of government expenditure on unemployment in Nigeria.  The study made use of time series data from 1985 to 2020. The study also employed Autoregressive Distributed Lag for the analysis of data collected and some diagnostic tests were also carried out such as serial correlation, heteroscedasticity test and stability test. The study found out that government expenditure has a negative and insignificant impact on unemployment in Nigeria. Also, interest rate has a positive and insignificant effect on unemployment in Nigeria whereas, trade openness has a negative and significant impact on unemployment in Nigeria. The study therefore recommended that there should be proper monitoring of government expenditure in order to reduce unemployment in Nigeria and interest rate should be reduced to a digit figure so as to spur real sector and thereby increase job opportunity in Nigeria.