EXPENDITURE-UNEMPLOYMENT RELATION IN SUB-SAHARAN AFRICA: MACROFINAMETRIC EVIDENCE FROM NIGERIA

Against the background of perennial double-digit unemployment and ever increasing public spending in the Sub-Saharan African Region, this study set out to investigate the empirical nexus between unemployment and government expenditure using Nigeria as a test case. Results indicated that an inverse but significant relationship existed between capital expenditure of government and unemployment both in the long-run and short-run. Invariably, capital expenditure actually boosts employment in the country. Recurrent expenditure, being just overhead, was found to relate negatively with unemployment both in the long-run and short-run, but not significantly. Thus, recurrent expenditure does not cause unemployment, but would not considerably drive employment. However, increasing capital expenditure relative to recurrent expenditure has the potential to cause significant reversal to the problem of unemployment in Nigeria, and by extension, the entire Sub-Saharan region of Africa.