THE EFFECT OF FEDERAL EXPENDITURE AND MONEY SUPPLY ON THE
RATE OF UNEMPLOYMENT (1989-2000)
ABSTRACT
This study is
motivated by the fact that federal expenditure and money supply as a tool on
the rate of unemployment. But to which extent, these instrument have
contributed either to worsen the problem of unemployment or alleviate it.
To investigate
this problem, two hypotheses were formulated as follows.
Ho: There is no relationship between money
supply and unemployment.
Hi: There is no relationship between federal
expenditure and unemployment.
In testing the hypothesis, secondary data was used and
analyzed using regression and correlation analysis as well as student t-test.
The following are summary of the major findings from the analysis carried out
in the study.
Federal expenditure and money supply contributed little to the
reduction on the rate unemployment between (1980-2000).
The package of National directorate of employment programme
conmcerning encouragement and generation of employment opportunities for most
especially school teachers from secondary school and graduate from higher
institution seems to be less vigorous since 1992 till date.
The inability of government of both federal and state
levels to lift embargo on public sector employment from (1994 to August 1999)
could be partly responsible for the high level of graduate unemployment in the
Urban areas.
On the strength of the findings, the following
recommendations were made.
The
use of these tools (federal expenditure and money supply) need to be reviewed
to enhance their potential for addressing the rate of unemployment.
Alternative tools may be used to complement federal
expenditure and money supply towards the alleviation on the rate of
unemployment.
The tool thrust should be the establishment of most
micro-credit scheme to assist enterprising unemployed people to set on micro
business across the country.
There is need to build up human capital, this mean
improving the knowledge, shall, capacities and the mental and physical
conditions of the masses.
TABLE OF CONTENTS
TITLE PAGE
APPROVAL PAGE
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENT
CHAPTER ONE
1.1
Background of the study
1.2
Statement of the problem
1.3
Objective of the study
1.4
Scope of the study
1.5
Research hypothesis.
1.6
Significance of the study
1.7
Limitation of study
1.8
Definitions of basic concepts.
Reference
CHAPTER TWO
2.0
Review of Literature
2.1 Theoretical Literature
2.2 Empirical Literature
2.3 References
CHAPTER THREE
3.0
Research deign and methodology
3.1 Model specification
3.2 Area of study/coverage
3.3 Source of data / analytical techniques
3.4 Decision rule
CHAPTER FOUR
4.0
Presentation and analysis of data
4.1 Presentation data
4.2 Presentation of table
4.3 Interpretation of table
4.4 Test of hypothesis
4.5 Reference.
CHAPTER FIVE
5.0
Summary of findings
5.1 Conclusion
5.2 Recommendation
5.3 Suggestion for further research
5.4 Bibliography
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Unemployment is an issue that has generated debates from
every nook and cranny of the world. Its impact was more, felt during the
industrial revolution when the dimension of man power absorption changed
towards the consideration of skill as a fundamental pre-requisite. However,
over the years, government around the world have been concerned with how the
unemployment question could be answered – similarly, the Nigeria economy was
characterized by severe unemployment, especially after the civil war which
necessitated policy measures aimed at reducing it’s.
Different government since 1970 till date have tried
different strategies in order to reduce unemployment, but the result still
remain persistent unemployment resulting in a number of social and economic
problems like crime, destitution, prostitution, corruption etc associated with it.
Index, unemployment in Nigeria
has assumed a frightened proportion. It is even more frightened considering the
fact that high rate of unemployment create poverty, misery and threatens social
cohesions reduction in the rate of unemployment has thus become a major policy
thrust of the government with the assistance of some international agencies
such as the international labour organization.
Moreover, since early 1970’s the revenue base of the
country has depended largely on the oil sector which has provided over 80% of
total government revenue. The growth of resource in the sector private
opportunity to initiate huge programme which substantially.
1.2
STATEMENT OF THE PROBLEM
Scrutinizing
the time series data on unemployment in Nigeria b/w 1960 and to mind 1980.
Nigeria was at a period of economic boom, which means unemployment was
something nobody could have dreamt about, but today unemployment has become so
severe that nobody likes to embrace it.
However,
unemployment in Nigeria is primarily youth unemployment, especially secondary
school leaver for instance in 1986, they constituted 65-3 percent of all the
employed in Nigeria. The figure for 1987 for this group was 70-7 percent when
figures are desegregated by location figures for Urban unemployment were higher
for all the years under survey with the exception of 1986. The national figures
for unemployment was 6.1 percent in 1986. It tell slightly to 5-3 percent in
1986 for all the year data indicate that unemployment was higher in the urban
than within the rural area.
Today, there
is a nation wide high rate of unemployment particularly among the youth that
are leader of tomorrow unemployment appear to be inherent in the nation
economic system, first, because intentionally or unintentionally the policy
maker do not resort to measure capable of reducing unemployment to an
acceptable level.
Furthermore,
tax collected from companies an private individual are misappropriated. The
expenditure on capital project are divested to private purses whilst
expenditure on personnel emolument are delayed by government officials.
This study is
therefore concerned with finding out the effect federal government expenditure
and money supply on rate of unemployment. Also, intend to investigate clearly
the extent to which these policies have contributed to worsen the problem of
unemployment or alleviate it completely.
1.3
OBJECTIVE OF THE STUDY
The objective of the study is to make some reasonably
investigations and, then find out some facts paltering to the rate of
unemployment and it level of existence in Nigeria.
Hence, the research work will go as far as tracing the root
of the problem, ever increasing number of the unemployment rate among Nigerian
and the cause of it, mostly especially our youth.
(a) To determine the effect of
federal expenditure & money supply on the rate of unemployment in our
society.
(b) To ascertain the efforts
and inputs of past and present government in the area of skill or rented or
vocational educative programme in our school toward solving the problem of
unemployment.
(c) To examine the statistical
application of the study, that will help to enhance the empirical finding the
effect of federal expenditure & money supply.
(d) To determine a suitable
solution toward changing and alleviating the problem of unemployment in our
society.
1.4
RESEARCH QUESTION
(a) What are the effect of federal
expenditure and money supply in changing rate of unemployment in Nigeria?
(b) Does the government make
any effort in increasing the education programmes in our school towards
changing the rate unemployment?
(c) What are the problems
associated in using statistical application.
(d) What are the effect of the
policies the government have used to change the rate of unemployment in
Nigeria.
(e) What extend have the
policies be used.
1.5
RESEARCH HYPOTHESIS.
Unemployment
has been characterized as one of the major attributes used to distinguish
developing nation such as Nigeria, from most developed nation, such as U.S.A.
in fact, the rate at which this phenomenon has been skyrocketing in Nigeria has
become much more alarming and beyond expectation.
HYPOTHESIS
Ho: There is no significant relationship between money supply and unemployment.
Hi: There is significant relationship between money supply and employment.
Ho: There is no significant relationship between federal expenditure and unemployment.
Hi: There is significant relation between federal expenditure and unemployment.
Where Ho: Null hypothesis
Hi: Alternative hypothesis
1.6
SIGNIFICANCE OF THE STUDY
In our nation
Nigeria, it has been confirmed and indeed apparent that no social or economic
welfare equaled finding job for the jobless citizens among us. In fact this has
created a dilemma that has inspired the researcher to investigate the roles
played by government on the changing or rat of unemployment at a goal.
Therefore, the
result of this research will help the provision of much needed information that
would enhance the creation of more employment opportunity for the masses in the
society, and these jobs may possibly come from three tiers of government (ie)
Federal, state & local the private and the citizens themselves.
Much more than
that the result will serve as a guide to the government and other employers
toward initiating programs for employment of the jobless Nigeria scattered all
over the country.
1.7
LIMITATION OF STUDY
It is rare or
completely impossible to have a research work that does not have one difficult
or another. In order word every research study has some shortcoming, which
arise as a result of problem encountered by the researcher in the course of his
research some limitation notably are:- History or today in most cases are not
adequate and this specifically hampered the results of the study since a full
data on unemployment and advertised vacancies in Nigeria by industrial sector
was no taken on some of the case.
Also notable
as a limitation is the lade of sophisticated investigation of domestic data
relating to the number of unemployment citizens of Nigeria.
The problem of
not having a central process of advertising vacancies both in private public
sector also constitute a limitation.
Finally, the
problem of inefficient organized records, as well as parts the researcher into
the difficult task of locating the various case notes.
Also, the late
arrived of publication from the federal office of statistics (FOS) on their
statistical computation for unemployment are also a problem that in fact keeps
the research work non absolute. In addition the (insufficient) hour permitted
to be used at (CBN) central bank of Nigeria library for the research work
contributed largely to the limitation a well.
1.8
DEFINITION OF BASIC
CONCEPTS
Monetary Policy:–
This is
constructing to be action by the monetary authorities to influence the national
economic objective by controlling or influencing the quantity and direction of
money supply, credit and the cost of credit. If is aimed at ensuring adequate
supply of money to support financial accommodating for growth and development
programs on the one hand and, stabilizes various sector of the economy for
sustainable growth and development on the other hand, monetary policy is defined
as policy employing the Central Bank Control of the money supply as an
instrument for achieving the objective of economic policy. Similarly from
synthesis of most of the literature and in the context of the Nigeria.
The ultimate
targets of the monetary policy within the time frame are:-
(1) Helping to stabilize the
economy.
(2) Full employment
(3) Enhancing the efficiency
of resources use
(4) Price stability
(5) Sustained increase in
growth and output
(6) Supporting output and
employment growth.
FEDERAL EXPENDITURE:
The is defined as government expenditure as taxes,
borrowing and financial administration to further national economic objective –
Government uses it expenditure and revenue activities to effect desired changes
in income, production, prices and employment.
These changes concern national economic objectives which
are targets of monetary & fiscal policy and include acceleration of
economic growth and development, balance of payment equilibrium, price
stability and reduction of rate of unemployment.
The main target of federal expenditure
Within these period are:-
(1) Maintenance of economic
equilibrium part to certain inflation, pressures accelerate economic growth and
development.
(2) Job creation and
employment
(3) Promotion of self-reliant
development
(4) Poverty alleviation.
UNEMPLOYMENT
This is the inability of economic cum society provide an
opportunity for individual eligible (eg) 18 to 65 years old to work and to
exercise their ability for exchange for emoluments. Hence, rendering such
skills redundant and useless in the environment through unemployment is a
worldwide phenomenon, it has assumed alarming dimension in Nigeria since the
year 1980’s.
Types of unemployment.
ü Above equilibrium
unemployment
ü Demand Deficient
unemployment
ü Structural unemployment
ü Frictional unemployment
ü Seasonal unemployment
ü Equilibrium unemployment
ü Regional unemployment
Full Employment.
This means
that those who are eligible and willing to work at the prevailing rate of pay
are able to find work without undue for difficulty.
UNDER EMPLOYMENT
This result when through one is employed; one is not making
full use of ones ability or skill in job place, or working below capacity. It
results in disguised unemployment.
LABOUR FORCE
Person who constitute the supply of labour for production
processes, they are usually between the age of 15-19yrs. This exclude, student,
homemaker, related person, the disable and those not interest in work.
COMPANIES INCOME TAX (C.I.T)
This is a tool for revenue generating by taxing the private
business enterprise directly.
INDIRECT TAX
It is a way a generation of revenue, through taxes that
individual or business do not directly pay for, they include, excise duties,
import duties value added taxes, sales tax (etc).
GOVERNEMTN RECURRENT EXPENDITURE (RECEX)
These are spending on running cost of the day today running
of the economy and government affair such as emolument.
GOVERNMENT CAPITAL EXPENDITURE (CAPEX)
It is one of the fiscal tools, which entail expenditure on
capital projects. That is spending on structure, physical asserts such as:
schools, roads bridges airports and all forms of social and economic
infrastructure facilities by the government.