ABSTRACT

Despite the numerous policies that have been set out over the years to tackle the hydra-headed problems of unemployment and poverty in Nigeria, not much progress has been made towards quelling the trend. Part of the reasons why these problems seem unsolvable is due to the fact that direction of causality between the two has not been ascertained in the light determination of policy direction. The main objective of this study, therefore, is to explore the direction of causality that exists between unemployment and poverty in Nigeria. Time series data were applied in carrying out this research work. Using the variables; unemployment, poverty, gross capital formation and government expenditure on social and community services, the granger causality test was carried out after Ordinary Least square (OLS) method of analysis was adopted to determine the overall validity of the model. The result showed that there exist one-way causality from unemployment to poverty and no causality from poverty to unemployment after the overall model was found to be significant. Against the above result, we recommended among others that government should tackle the issue of unemployment, through utilization of its abundant manpower if poverty is to be eradicated in the country.