Background: In Nigeria, a country with a predominantly
youthful population estimated at over 224 million, the capacity for growth to
generate productive jobs is a pressing development concern.
Aim: This study examines the employment effects of sectoral
contributions to Nigeria’s GDP and evaluates the relative labour‑absorption
capacity of agriculture, industry and services over 1981–2021.
It seeks to identify which sectors are growth‑led in employment generation and
to inform policy that aligns growth with inclusive job creation. The core
problem addressed in this study is the lack of clear, long-run, sectorally
disaggregated evidence showing the employment contributions of the broad
sectors of agriculture, industry, or services. Existing studies have either
focused on aggregate relationships, examined single sectors in isolation, or
limited their analysis to short‑run dynamics.
Theoretical Framework: The analysis is grounded in Keynesian
demand theory and Okun’s law, which link aggregate output to employment, and
extends these to a sectoral perspective. The framework recognises capital
intensity, technology bias, and value chain linkages as mediating mechanisms
that determine whether sectoral growth translates into net employment gains.
Methodology: Using annual data for 1981-2021 sourced from
the Central Bank of Nigeria’s statistical bulletin and Penn World Tables, the
study proxies sectoral output by agricultural, industrial and services GDP and
measures employment by total employed persons. After log transformation and
unit root testing, an Autoregressive Distributed Lag (ARDL) bounds testing
approach is employed to detect cointegration and estimate short-run dynamics
and long-run elasticities. Estimated models control for inflation, public
expenditure and lagged employment; diagnostic checks ensure robustness.
Results: Bounds tests indicate cointegration at both
aggregate and disaggregated levels. Long-run elasticities indicate that
agricultural GDP has the highest employment intensity, supporting a growth-led
employment strategy. Industrial expansion displays characteristics of jobless growth,
while service‑sector growth is associated with job‑loss
dynamics, reflecting low labour absorption due to capital and technology
intensity. Public expenditure shows a positive long‑run
association with employment. In the aggregate analysis, a 1% rise in GDP is
associated with a 0.27% increase in employment in the short run.
In comparison, a 1% increase in GDP raises employment by
about 0.53% in the long run, roughly double the short‑run
elasticity, indicating that the employment response to growth strengthens over
time. When GDP is disaggregated, short‑run dynamics reveal important
heterogeneity across sectors. Agricultural output (AGRGDP) exerts a positive
and significant short‑run effect on employment (approximately 0.15% per 1%
AGRGDP increase), while industry and services coefficients are negative and
statistically insignificant. Agricultural GDP displays a large and significant
long‑run
elasticity (≈0.52), implying that sustained agricultural expansion is strongly
employment‑intensive. By contrast, industry and services show
small negative long‑run coefficients (statistically insignificant).
Conclusion: Policy should prioritise targeted support for
agriculture and labour‑intensive industrialisation, strengthen value‑chain
investments, and align fiscal allocations to maximise employment outcomes.
Reorienting sectoral growth toward labour‑absorbing activities is essential
to mitigate Nigeria’s persistent unemployment
challenge. Future research should disaggregate services and industry to
identify sub‑sectoral employment potentials.
Author(s) Details
Ololade J. Olaniyan
Afe Babalola University, Ado-Ekiti (ABUAD) Business School - Ibadan,
Nigeria.
Rosemary Bukola Ajala
The Federal Polytechnic, Ado Ekiti, Nigeria.
Please see the book here :- https://doi.org/10.9734/bpi/ebmra/v1/7319
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