Remittance Inflow and Unemployment in Nigeria

Ihedimma, Godfrey Ikechukwu; Opara, Godstime

doi:10.22059/ier.2022.89097

Remittance Inflow and Unemployment in Nigeria

Authors

Godfrey Ikechukwu Ihedimma ¹

Godstime Opara ²

¹ Department of Economics, Spiritan University, Nneochi, Abia State, Nigeria

² Department of Economics, Imo State University, Owerri, Imo State, Nigeria

10.22059/ier.2022.89097

Abstract

Nigeria is unarguably one of the countries with its citizens widely spread across the globe and the income earned forms a huge chunk of remittance back to Nigeria. The study focuses on what implications remittances may have for unemployment in Nigeria. Remittance is treated as being endogenously determined by the number of migrants, the nominal exchange rate (with the Naira as local currency), the inflation rate and the migrants’ income. Data from 1981 to 2019 is calibrated for structural break points and stationarity under conditions of regimes changes. While the data was found to have been affected by regime changes and stationary in levels, an Instrumental Variable Regression model was estimated and it was found that remittance positively and significantly influence unemployment. However, when remittance is interacted with the dependants in Nigeria, unemployment is observed to fall. The study strongly recommends that fiscal planning should take an account of the inflow of remittances when curbing unemployment. The study further recommends that there is the need to deliberately encourage a rise in the demand for the Naira as this would protect the value of locally produced goods from being eroded by remittances.

Keywords

Remittance

Dependant

Endogenous

Financial Openness

Unemployment

Interaction

IV Estimation

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