DOI: 10.36347/sjebm.2019.v06i01.011

Pages: 76-82

Unemployment is a persistent challenge in Nigeria for countries, especially the developing ones. Nigeria as a developing country faces a whole gamut of effort to reduce the increasing spate of joblessness amongst her citizens. Okun’s law suggests that promoting economic growth is a potent strategy to reduce unemployment rate. This study investigated Okun’s law in Nigeria through the error correction model dynamic model within the time frame of 1980 to 2017. The data used in the were registered unemployment and real GDP. The study concluded that the relationship between unemployment and economic growth follows Okun’s law. Okun verified that the coefficient of unemployment was -0.3 in United States, but it was empirically discovered in this study that coefficient of unemployment was -0.2. Again, It was verified that the relationship between unemployment and economic growth was unilateral. It means that it was increased GDP that cause negative change to unemployment not the other way round. The problem that hinders economic growth in Nigeria is over population of which greater number of active labour-force lacks labour efficiency. Based on above stated findings, the study made the following recommendations: Nigeria Government should formulate monetary and fiscal policies that are channeled towards increased economic growth to reduce unemployment.