Labor Market Effects of Emigration in Nigeria: Skill-level Analysis

Document Type : Research Paper

Author

Department of Economics, Federal University of Agriculture, Abeokuta, Nigeria

Abstract

This paper seeks to provide empirical information of how emigration influences employment and wages in Nigeria with special reference to high and low skill labor between 1980 and 2016. The study is premised on the modified neoclassical labor market theory while generalized method of moments (GMM) was employed as method of analysis. Starting from the drivers of emigration in each skill, economic size, income differentials and remittances play positive and important role in the case of emigration of high skill labor while income differentials and population are significant in driving emigration of low skill workers. Emigration of high skilled magnifies employment and wages of high and low skill workers. In the same vein, emigration of low skill labor has both employment and wage effect with employment being more sensitive. The wage response to emigration for each skill suggests that emigration of high skill labor widens income gap. Additional finding is that wages sluggishly respond to inflation in both labor market segments. Following these results, employment-driven economy should be pursued in order to stem emigration of high skill workers and to create more jobs for low skill workers. Also, remittances should be allowed to function as a source of investment rather than a source of funding emigration. To discourage the adverse effect of inflation on wages, the authorities should ensure low inflation or reduce the impact by ensuring that workers are paid inflation-adjusted wages.
 

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