UNEMPLOYMENT AND ITS IMPACT ON NIGERIAN ECONOMIC GROWTH: AN ARDL APPROACH, 1999–2025

Abstract

This study examines effect of unemployment in Nigeria's economic growth (1999–2025), anchored in Endogenous Growth Theory, which links human capital utilization to long-run growth. Real GDP (logged) is modelled as a function of unemployment, population, inflation, and government capital expenditure. Given mixed integration orders, the ARDL bounds-testing approach and Error Correction Model estimate short- and long-run dynamics. Cointegration is confirmed at the 10 percent level. Unemployment has a negative significant ffect on output in both periods, with persistence across two lags reflecting labour-market shocks that erode human capital rather than dissipate quickly. Inflation and government capital expenditure are insignificant, while population is positive and significant in the long run. The error correction term (−0.7225) shows about 72 percent of short-run disequilibrium corrected within one period. Unemployment is a structural constraint on growth, warranting targeted employment-generating investment, efficient public capital allocation, skills development, and price-stabilising macroeconomic policy.