IMPACT OF ECONOMIC GROWTH AND INFLATION ON UNEMPLOYMENT RATE IN NIGERIA: 1981-2022

Abstract

The study examines the impact of economic growth and inflation on unemployment rate in Nigeria from 1981 to 2022 using Autoregressive Distributed Lag Model. Findings show that economic growth, inflation have a positive effect on unemployment in the short-run and age dependency ratio affects unemployment negatively in the short run. Study outcomes appears to violates both the Okun law’s and Phillips curve in the Nigerian economy in the short run. However, in the long-run, eco nomic growth is positively related to unemployment and inflation negatively associated with unem ployment; thereby affirming Phillips curve which holds an inverse relationship between the two variables. While, age dependency ratio affects unemployment negatively. The violation of both the Okun law’s and Phillips curve in the Nigerian economy in the short run suggest that there are other factors influencing the level of unemployment rate in Nigeria. Therefore, the study recommended implementation of sound macroeconomic stabilization policies with the of achieving a single infla tion, low unemployment rates and high economic growth rates.