Productivity Growth, Wages and Employment Nexus: Evidence from Nigeria

Asaleye, Abiola John and Olurinola, I. and Oloni, E.F. and Ogunjobi, J. O. (2017) Productivity Growth, Wages and Employment Nexus: Evidence from Nigeria. Journal of Applied Economic Sciences, 12 (5). p. 1362. ISSN 2393 – 5162

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Abstract

The nexus amongst productivity growth, employment and wages have generated debate in literature. Nigeria has witnessed increase in economic growth rate in the last decade which some scholars termed as jobless as unemployment has been growing all along. Therefore, this study joins this debate to investigate the impact of the growth on labour market performance in Nigeria using auto-regressive distributed lag (ARDL). The main advantage of this approach lies in the fact that it can be applied irrespective of whether the variables are I (0) or I (1). The ARDL revealed that using the RGDP (productivity growth), E (employment) and RW (real wages) as dependent variable, there is an existence of long run relationship. Also, it was showed that the output growth does not translate into employment gains both in the short and long-run while the influence of wages is not statistically significant. The implication is that the wages do not adjust to reflect the cost of living both in the short and longrun. The work suggested amongst others that government should aim to integrate employment and wages into the growth system both in the short and long run through targeting variable such as interest rate. Keywords: productivity growth; wages; employment; Auto-Regressive Distributed Lag (ARDL)

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