THE NEXUS BETWEEN HUMAN CAPITAL AND INCOME INEQUALITY: THE NIGERIAN EXPERIENCE

Olufemi, Ogunjobi Joseph and Abel, Awe A and Ayoade, Ogunjumo Rotimi and Andrew, Onabote Ademola (2022) THE NEXUS BETWEEN HUMAN CAPITAL AND INCOME INEQUALITY: THE NIGERIAN EXPERIENCE. African Journal of Business and Economic Development| ISSN, 2 (12).

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Abstract

The study examines the relationship between human capital and income inequality in Nigeria from 1981 to 2019. The study made use of secondary data and the autoregressive distributed lag (ARDL) bounds test estimation technique to analyze the data. The variables used in the analysis include income inequality, tertiary education enrolment, secondary school enrolment, government health expenditure, inflation rate, employment rate and gdp per capita. The results of the findings showed that one-year lagged income inequality and secondary school enrolment are both significant at the 5% level. In the long run, tertiary education enrolment, secondary school enrolment, government expenditure on health and employment rate are all statistically significant at the 1% level. Thus, in the long run, all the indicators of human capital are significant drivers of income inequality in Nigeria. Notwithstanding, of all the indicators, only tertiary school enrolment is negatively related to income inequality, as expected. The implication is that, in Nigeria, it is tertiary school enrolment that significantly lowers income inequality. Sequel to the finding in respect of the importance of tertiary school enrolment, it is recommended that policy makers continually support enrolment to tertiary schools in order to continuously witness significant declines in income inequality in Nigeria.

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