Human Capital Investment and Income Inequality in Nigeria

This study investigates the effect of human capital investment on income inequality in Nigeria, covering the period from 1990 to 2024. The study proxied income inequality by Gini coefficient while human capital investment was proxied by government education expenditure, government health expenditure, government research and development expenditure and government social service expenditure. Annual time series data used were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin and World Bank Development indicators. The major technique of data analysis adopted was Autoregressive Distributed Lag (ARDL) technique. The key findings of the study showed that government education expenditure has negative and significant effect on Gini coefficient in Nigeria, government health expenditure has a significant negative effect on Gini coefficient in Nigeria, government research and development expenditure has significant negative effect on Gini coefficient in Nigeria while government social service expenditure also has negative and significant effect on Gini coefficient in Nigeria. Based on the findings, the study concluded that human capital investment is relatively effective in reducing income inequality in Nigeria. The study recommended that government should restructure education spending to become more pro-poor. This can be achieved by increasing funding for basic education, improving access in rural and underserved communities, and expanding scholarship and school-feeding programs targeted at children from low-income households. Emphasizing equity-based allocation would help ensure that education spending contributes to reducing, rather than widening, income inequality.