Flattening Unemployment Curve in Nigeria: The Role of Human Capital Financing

Kingsley O. Onyele¹ , Florence O. Ariwa²

Section:Research Paper, Product Type: Journal-Paper
Vol.8 , Issue.4 , pp.6-13, Dec-2020

Online published on Dec 31, 2020

Copyright © Kingsley O. Onyele, Florence O. Ariwa . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
This paper looked at the role of human capital financing in unemployment reduction in Nigeria. The study used annual time-series data from 1991-2018. The stationarity test revealed that all the variables became stationary after first differencing, hence Johansen cointegration method and Vector Error Correction Model (VECM) were applied to show the speed of adjustment of the system to their equilibrium position in the long-run. The analysis revealed that the relationship between human capital financing and unemployment existed in the long and short-run during the study period. Specifically, in the long-run, the estimated coefficients indicated that health financing exerted a positive influence on unemployment rate while education financing had a negative effect. The Granger causality test showed that an interaction mechanism existed between education and health financing; and monetary policy rate. Consequently, the study argues that for unemployment rate to be flattened in Nigeria, government should prioritize human capital financing by increasing yearly budgetary allocation to education and health sectors since they are significant components of human capital financing in a country.

Key-Words / Index Term :
Human capital, Financing, Education, Health, Unemployment

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