Journal of Indonesian Applied Economics
Vol. 12 No. 1 (2024): February 2024

Modelling the Okun’s Law in the midst of Structural Breaks: Evidence from Nigeria

Iyoboyi, Martins (Unknown)
Sabitu , Abubakar (Unknown)
Felix Okereke, Samuel (Unknown)



Article Info

Publish Date
29 Feb 2024

Abstract

Purpose This study aims to examine the relationship between economic growth and unemployment in Nigeria, specifically investigating the validity of Okun's law. Design/methodology/approach The study employs both linear and non-linear specifications using quarterly data from 1991Q1 to 2019Q1. Cointegration techniques that account for structural breaks are applied. Findings Unemployment and economic growth are found to be cointegrated. Both linear and non-linear specifications show a positive relationship between growth and unemployment, but the impact of unemployment on growth is not statistically significant. The study concludes that the growth experienced in Nigeria during the study period did not lead to reduced unemployment, thus invalidating Okun's law. Research limitations/implications The study's findings are based on data up to 2019Q1 and may not reflect more recent trends.  The analysis relies on the accuracy and reliability of the data sources used. Originality/value This study contributes to the understanding of the relationship between economic growth and unemployment in Nigeria, highlighting the need for policies targeting sectors with high employment potential.

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Journal Info

Abbrev

jiae

Publisher

Subject

Economics, Econometrics & Finance

Description

Journal of Indonesian Applied Economics (JIAE) is an online journal sponsored by the Faculty of Economics and Bussiness, Universitas Brawijaya. The purpose of this journal is to enhance the study of economic issues on all aspects of applied economics and ...