Macroeconomic Reforms and Labour Market Performance: Evidence from Nigeria

The Nigerian government has introduced various macroeconomic reforms, policies and programmes that are not consistent and have not yielded the desired result, given the high unemployment rate. This study investigates macroeconomic reforms on labour market performance in pre and post-reform eras using statistical analysis and Vector Error Correction Model. The findings show that using the 'comparison of the mean employment ratio analysis' between the pre-reform era and post-reform, the macroeconomic reforms targeting key variables have not promoted employment. More so, evidence from the long-run employment equation indicates that employment has a negative relationship with output in the long-run. However, the study shows joint long and short-run causality using employment as a dependent variable. Also, the forecast error shock from government expenditure affects output more than any other variable, with minimal employment effect. Mismanagement of resource is mainly an indicator of a fundamental weakness in policies and institutions. Therefore, to improve the situation, the study suggests that among others, strengthening fiscal capacities and institutions to ensure the restructuring of property rights and to ensure political stability regarding economic reforms.