Industrialization and Employment Generation in Nigeria: An Empirical Analysis

Abstract

This study examined the impact of industrialization on employment creation, taking evidence from the Nigerian economy and using annual data covering the period of 1990 to 2022. The specific objectives were to determine the causal relationship between industrialization and employment creation in Nigeria and to examine the impact of industrialization on employment creation in Nigeria. To draw empirical evidence, the econometric methods of autoregressive distributed lag (ARDL) with Error Correction Mechanism (ECM) and the Granger causality test were employed as the analytical techniques. The results of the ARDL and ECM reveal that a short-run and long-run relationship exists between industrial sector output and employment creation (proxied by the unemployment rate) in Nigeria. With the establishment of a long-run relationship and the aid of the ARDL bounds test for cointegration, the long-run and short-run estimates were estimated. The findings of the study reveal that industrial sector performance has a negative and significant impact on the unemployment rate in Nigeria. In other words, it has a positive and significant impact on employment creation in Nigeria. Therefore, the study, among other requisite recommendations, suggests that the Nigerian authority prioritize the growth and improvement of the industrial sector through the provision of basic infrastructure such as transport networks, energy systems, and communication technologies, among others.