Functional Government Spending, Unemployment and Poverty Reduction in Nigeria
Olanipekun Emmanuel Falade Ph.D; David Babatunde

This paper investigates the effects of government spending on unemployment and poverty in Nigeria. Government spending was disaggregated into its capital and recurrent functional components (economic service, administration, social service and transfer) measured at the federal level in order to isolate their individual effects on unemployment and poverty level for the period 1980-2017 using ARDL methodology. The results validate the fact that poverty is inherent in Nigeria and reveal significant heterogeneity in the effects of different components of public spending on unemployment and poverty. It was revealed that unemployment does not have any significant impact on poverty. This implies that reduction in unemployment rate may not be a channel through which government expenditure could impact on poverty. The findings show that while administrative and transfer components of capital expenditure could be used to reduce poverty both in the short and long run periods, capital expenditure on economic services and social services has no direct significant impact on poverty but rather could be used to reduce unemployment. Estimated results also show that none of the functional recurrent expenditure components has significant relationship with poverty in the short and long run periods. Based on these findings it is recommended that emphasis should be placed on government capital spending especially administrative and transfers components to reduce poverty while, capital expenditure on economic services and social services should be emphasized in tackling unemployment level in Nigeria.

Full Text: PDF     DOI: 10.15640/jeds.v8n1a9