Government Expenditure and Unemployment in Nigeria

This study examines the relationship between government expenditure and unemployment in Nigeria from 1986 to 2023. Unemployment pressure has remained a major macroeconomic challenge with headlines on unemployment figure rising steadily according to CPI rebasing. Concurrently, government spending increased substantially, driven by fuel subsidy payments, debt servicing, and expansionary fiscal policies. Using data from the national bureau of statistics and CBN, employing statistical and econometrics techniques, this study adopts a descriptive approach to access trends and analyze how recurrent and capital expenditure influence macroeconomic variables. Findings suggest that unemployment has a negative relationship with capital and recurrent expenditure both on the long and short run between the periods under review. Also, from the short and long run result of the unemployment model, it was observed that capital expenditure exerts more influence on unemployment than recurrent expenditure. is is evidenced on the coefficient of the variables in the short run result in the current period where one percent increase in capital and recurrent expenditure will lead to 0.2 and 0.08 percent increase in employment respectively. Also, the analysis of the short-run coefficient showed that capital expenditure pressure is more than the recurrent expenditure in one and two period's logged lagged values of capital and recurrent expenditure. is means that a one percent increase in one and two periods logged lagged values in capital and recurrent expenditure led to 0.19 percent and 0.001 as well 0.224 and 0.0003 percent reduction in unemployment respectively. Conclusively, the study recommends prudent fiscal and monetary measures should be adopted in government expenditure since it is relevant in influencing macro-economic variables in an economy. This is because increased government expenditure will increase aggregate demand, investment, and production and generate employment opportunities.