Educational levels and economic growth in Nigeria: Evidence from ARDL and Toda-Yamamoto causality approaches

The declining gap between education and economic growth in Nigeria needs urgent policy attention. This paper therefore examines educational levels-economic growth nexus in Nigeria by applying autoregressive distributed lag and Toda-Yamamoto causality test to time series data spanning 1981 to 2020. Augmented Dicky-Fuller, Phillips-Perron and Zivot-Andrews unit root tests indicate a mixture of I(0) and I(1) stationarity properties of data. Bounds test reveals cointegration between primary, secondary and tertiary education indices, and real gross domestic product (RGDP). Findings indicate positive impact of primary, secondary and tertiary education indices and education policy dummy (NEP) on RGDP with the tertiary education index being significant. Toda-Yamamoto causality test reveals that secondary and tertiary education indices and NEP cause RGDP without a feedback effect. Diagnostic tests justify reliability of the parameter estimates. Hence, the study recommends for educational reform in line with the actual needs of the global economy, increased educational funding and strict implementation, monitoring and periodic evaluation of education policies in Nigeria.