EFFECT OF FEDERAL EXPENDITURE AND MONEY SUPPLY ON THE RATE OF UNEMPLOYMENT
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EFFECT OF FEDERAL EXPENDITURE AND MONEY SUPPLY ON THE RATE OF UNEMPLOYMENT
ABSTRACT
This study is inspired by the notion that federal spending and the money supply can be used to influence the unemployment rate. But to what extent have these instruments helped to either worsening or alleviating the problem of unemployment?
Two hypotheses were developed to study this topic.
Ho: There is no link between the availability of money and the level of unemployment.
Hi: The link between federal spending and unemployment is non-existent.
Secondary data was used to test the hypothesis, and it was analysed using regression and correlation analysis, as well as the student t-test. The following is a summary of the significant conclusions from the study’s analysis.
Between 1980 and 2000, federal spending and the money supply had minimal impact on the rate of unemployment.
Since 1992, the package of National Directorate of work Programmes about stimulation and generation of work possibilities for school teachers from secondary school and graduates from higher education institutions appears to be less robust.
The inability of both federal and state governments to break the embargo on public sector hiring from (1994 to August 1999) may have contributed to the high proportion of graduate unemployment in urban regions.
The following recommendations were made based on the findings.
The utilisation of these mechanisms (federal expenditure and money supply) should be reconsidered in order to maximise their potential for addressing the unemployment rate.
Alternative tools may be utilised to supplement federal spending and money supply in order to reduce unemployment.
The major thrust should be the construction of most micro-credit schemes to enable ambitious unemployed individuals across the country in starting tiny businesses.
There is a need to increase human capital, which means enhancing people’s knowledge, skills, and mental and physical health.
INTRODUCTION TO CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Unemployment is a topic that has sparked debate in every corner of the globe. Its impact was felt more strongly during the industrial revolution, when the dimension of manpower absorption shifted to include skill as a basic pre-requisite.
However, governments around the world have been preoccupied over the years with how to answer the unemployment question – similarly, the Nigerian economy was characterised by chronic unemployment, particularly following the civil war, necessitating policy initiatives targeted at lowering it.
Since 1970, several governments have tried various measures to eliminate unemployment, but the outcome has been permanent unemployment, which has resulted in a multitude of social and economic problems such as crime, destitution, prostitution, and corruption.
According to the Index, unemployment in Nigeria has reached frightening proportions. It is even more frightening given that excessive unemployment creates poverty, unhappiness, and threatens social cohesion.
Reduced unemployment has thus become a significant policy objective of the government, with the aid of some international organisations such as the International Labour Organisation.
Furthermore, since the early 1970s, the country’s revenue base has been heavily reliant on the oil sector, which has generated more than 80% of total government revenue. The expansion of resources in the private sector provides an opportunity to launch a large-scale plan.
1.2 STATEMENT OF THE PROBLEM
Examining the time series statistics on unemployment in Nigeria between 1960 and 1980. Nigeria was experiencing an economic boom, which meant that unemployment was unheard of, but today it has gotten so bad that no one wants to accept it.
However, youth unemployment is largely a problem in Nigeria, particularly among secondary school dropouts, who made up 65-3 percent of all working Nigerians in 1986. When numbers are desegregated by location, the figure for this category in 1987 was 70-7 percent.
With the exception of 1986, urban unemployment was greater for all years under survey. In 1986, the national unemployment rate was 6.1 percent. It tells slightly to 5-3 percent in 1986 for the entire year data show that unemployment was higher in the urban region than in the rural area.
Today, there is a nationwide high rate of unemployment, particularly among the youth who will be the leaders of tomorrow. This appears to be inherent in the nation’s economic system, first because policymakers, whether intentionally or unintentionally, do not resort to measures capable of reducing unemployment to an acceptable level.
Furthermore, taxes collected from businesses and individuals are misappropriated. Government officials delay spending on personnel emoluments while spending on capital projects is diverted to private pockets.
As a result, the purpose of this research is to determine the impact of federal government spending and the money supply on the unemployment rate. In addition, we plan to thoroughly analyse the extent to which these initiatives have exacerbated or totally alleviated the problem of unemployment.
1.3 STUDY GOAL
The study’s goal is to do some reasonable inquiries and then discover some data concerning the rate of unemployment and its level of existence in Nigeria.
As a result, the research will go as far as pinpointing the source of the problem, the ever-increasing rate of unemployment among Nigerians, and the causes of it, particularly among our youth.
(a) To ascertain the impact of government spending and the money supply on the rate of unemployment in our society.
(b) Determine historical and present government efforts and inputs in the area of skill or training or vocational educative programme in our school towards tackling the problem of unemployment.
(c) Examine the statistical application of the study, which will aid in improving the empirical finding of the effect of federal expenditure on money supply.
(d) To find a viable answer to modifying and easing our society’s unemployment problem.
1.4 THE RESEARCH QUESTION
(a) How do federal spending and the money supply affect the rate of unemployment in Nigeria?
(a) Does the government make any efforts to increase education programmes in our schools in order to reduce the rate of unemployment?
(c) Describe the issues that arise when employing statistical applications.
(d) What are the effects of the government’s policies on the rate of unemployment in Nigeria?
(f) To what extent have the policies been implemented?
1.5 RESEARCH HYPOTHESIS
Unemployment has been identified as one of the primary characteristics that distinguishes developing nations such as Nigeria from most developed nations such as the United States of America. In fact, the rate at which this epidemic has spread in Nigeria has gotten considerably more frightening and out of control.
HYPOTHESIS
Ho: There is no statistically significant link between money supply and unemployment.
Hi: Money supply and employment have a considerable link.
Ho: There is no statistically significant association between federal spending and unemployment.
Hi: There is a considerable relationship between federal spending and unemployment.
Where Ho denotes the null hypothesis
Hello: Another hypothesis
1.6 THE SIGNIFICANCE OF THE STUDY
In our country, Nigeria, it has been confirmed and made clear that no social or economic welfare equals finding work for our unemployed individuals. In fact, this has generated a quandary that has prompted the researcher to study the roles of government in the altering or rat of unemployment at a goal.
As a result, the findings of this study will aid in the provision of much-needed information that will aid in the creation of more job opportunities for the masses in society, and these jobs may come from three tiers of government (ie) federal, state, and local, private, and citizens themselves.
More than that, the outcome would act as a guide for the government and other employers in launching programmes to employ the unemployed Nigerians distributed across the country.
1.7 DEFINITION OF FUNDAMENTAL TERMS
Fiscal Policy:-
This is developing to be monetary authorities’ activity to impact the national economic goal by controlling or affecting the quantity and direction of money supply, credit, and credit cost. Monetary policy is defined as policy that uses the Central Bank’s control of the money supply as an instrument to achieve the goal of economic policy.
It is aimed at ensuring adequate supply of money to support financial accommodating for growth and development programmes on the one hand, and stabilising various sectors of the economy for sustainable growth and development on the other. Similarly, based on a synthesis of the majority of the literature and in the context of Nigeria.
The following are the long-term objectives of monetary policy:
(1) Contributing to economic stability.
(2) Full-time employment
(3) Improving resource utilisation efficiency
(4) Price consistency
(5) Consistent growth and output increases
(6) Encouraging output and employment growth.
FEDERAL SPENDING:
Government expenditure is described as taxation, borrowing, and financial management to achieve national economic objectives – The government uses its expenditure and revenue operations to affect desired changes in income, production, prices, and employment.
These changes affect national economic objectives, which are monetary and fiscal policy priorities, and include accelerating economic growth and development, achieving balance of payment equilibrium, maintaining price stability, and lowering the unemployment rate.
The primary goal of federal spending
During this time, the following events occur:
(1) Maintaining economic balance in the face of inflationary pressures accelerates economic growth and development.
(2) Employment and job creation
(3) Encouragement of self-sufficiency development
(4) Reduction of poverty.
UNEMPLOYMENT
This is the incapacity of economy cum society to provide a chance for individuals aged 18 to 65 to work and exercise their potential in exchange for emoluments. As a result, while unemployment renders such talents redundant and ineffective in the environment, it has taken on worrying proportions in Nigeria since the 1980s.
There are various types of unemployment.
ü Unemployment over the equilibrium level
ü Unemployment due to a lack of demand
ü Unemployment caused by structural factors
ü Intermittent unemployment
ü Seasonal joblessness
ü Unemployment in equilibrium
ü Unemployment in the region
Full-time work.
This indicates that people who are qualified and willing to work at the current rate of pay will have no trouble finding work.
IN EMPLOYMENT
This occurs when one is engaged and does not fully utilise one’s competence or expertise in the workplace, or when one works below capacity. It leads to covert unemployment.
WORK FORCE
People who contribute labour for manufacturing processes are often between the ages of 15 and 19. This excludes students, homemakers, relatives, the disabled, and those who are not interested in working.
CORPORATE INCOME TAX (C.I.T)
This is a mechanism for generating cash by directly taxing private businesses.
INDIRECT TAXATION
It is a method of generating money through taxes that individuals or businesses do not directly pay for, such as excise fees, import duties, value added taxes, sales tax (and so on).
RECURRENT EXPENDITURE (RECEX) OF GOVERNEMTN
These are expenditures for the day-to-day operation of the economy and government affairs such as remuneration.
CAPITAL EXPENDITURE OF THE GOVERNMENT (CAPEX)
It is one of the fiscal tools used to finance capital projects. That is government spending on physical structures such as schools, roads, bridges, airports, and all other types of social and economic infrastructure assets.
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