Effect of Public Educational Spending and Macroeconomic Uncertainty on Schooling Outcomes: Evidence from Nigeria

This study examines the effect of government educational spending and macroeconomic uncertainty on schooling outcomes in Nigeria using the econometric methods of cointegration and error correction mechanism together with the vector autoregression methodology. The results indicate that schooling outcome cointegrated with all the identified explanatory variables. The study found that public educational spending impacts positively on schooling outcome while macroeconomic instability impacts negatively. The variance decomposition analysis shows that “own shocks” constitute the predominant source of variation in schooling outcome. The impulse response analysis shows that any unanticipated increase in the macroeconomic uncertainty rate will have a contractionary impact on literacy rate. The policy implication of this study is that government should pay attention to policies that enhance educational attainment through adequate public social investment under stable macroeconomic environment.