ABSTRACT

This study examines the nexus between human capital investment and poverty reduction in Nigeria. Specifically the study investigated the profile of poverty in Nigeria in the wake of human capital investment drive since 2005, the impacts of education and health expenditures on poverty level using probit regression model. The major findings of the study revealed, among other things, that poverty incidence by gender is higher for male-headed households than the female-headed household, households headed by old people who are 65 years and above have the highest poverty incidence in Nigeria followed by household whose heads fall within the age group 35 to 44 years old, the poverty gap and severity is higher for household whose head falls into the age range of below 25 years (human capital development range), the larger the household size the higher the poverty headcount ratio and that contrary to expectations that the higher the education level (human capital investment), the lower the poverty status, our findings reveal that the axiom is true only to some extent. While poverty level decreases with additional educational attainment, this stopped at the secondary education level where we found that the headcount index for post secondary education is higher than that of secondary education, although poverty status of post secondary education headed household is still better than those of heads who only attained primary education or those that have no formal education at all. Also the study revealed that the increase in the expenditure on education significantly affects the probability of households being poor. One acquires more education by increasing ones expenditure on education, the increase in the expenditure on health significantly affects the probability of households being poor. The results show that expenditure on health reduces the probability that the household will be poor. This is because, as the households increase, their resources become more and more stretched and per capita expenditures decrease. This will reduce the amount the household can save and invest and therefore increasing their likelihood of being poor. Finally the study found that the level of educational attainments reduces the probability of being poor as compared to those with no education. As one acquires more education, his/her chances of getting higher paid job broaden. Thus, getting higher paid job owing to higher education attainment pull one out from poverty, and on this, we calls for both the government and private individual to scale up their expenditures on education and health as to redirect the ravaging level of poverty in the country.