Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria?

Okun (1962) statistically established a negative association between growth and unemployment. This is known as Okun’s Law. This paper investigates, if Okun’s law holds in Nigeria considering the nature of its system of governance, and the study employs an ARDL bounds test approach using data coverin...

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Main Authors:	Dankumo, Ali Madina, Suryati Ishak, Oluwaseyi, Zubair Azeem, Onisanwa, Idowu Daniel
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2019
Online Access:	http://journalarticle.ukm.my/14145/ http://journalarticle.ukm.my/14145/ http://journalarticle.ukm.my/14145/1/jeko_53%283%29-12.pdf

id	ukm-14145
recordtype	eprints
spelling	ukm-141452020-02-07T10:58:29Z http://journalarticle.ukm.my/14145/ Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria? Dankumo, Ali Madina Suryati Ishak, Oluwaseyi, Zubair Azeem Onisanwa, Idowu Daniel Okun (1962) statistically established a negative association between growth and unemployment. This is known as Okun’s Law. This paper investigates, if Okun’s law holds in Nigeria considering the nature of its system of governance, and the study employs an ARDL bounds test approach using data covering the period of 22 years between 1996 and 2017. The results show that unemployment, efforts to reduce corruption and political stability have a negative relationship with growth, although only political stability is significant, whereas, unemployment and corruption are not. The role control of corruption and political stability are contrary to the expected effect which was a positive one. This result is thus contrary to Okun’s law, which states that “1% decrease in unemployment will lead to 2% increase in GDP”, even though the relationship is shown to be negative. Measures and policies to enhance stable and conducive environments were recommended. Penerbit Universiti Kebangsaan Malaysia 2019 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/14145/1/jeko_53%283%29-12.pdf Dankumo, Ali Madina and Suryati Ishak, and Oluwaseyi, Zubair Azeem and Onisanwa, Idowu Daniel (2019) Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria? Jurnal Ekonomi Malaysia, 53 (3). pp. 1-10. ISSN 0127-1962 http://www.ukm.my/fep/jem/content/2019-3.html
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
language	English
description	Okun (1962) statistically established a negative association between growth and unemployment. This is known as Okun’s Law. This paper investigates, if Okun’s law holds in Nigeria considering the nature of its system of governance, and the study employs an ARDL bounds test approach using data covering the period of 22 years between 1996 and 2017. The results show that unemployment, efforts to reduce corruption and political stability have a negative relationship with growth, although only political stability is significant, whereas, unemployment and corruption are not. The role control of corruption and political stability are contrary to the expected effect which was a positive one. This result is thus contrary to Okun’s law, which states that “1% decrease in unemployment will lead to 2% increase in GDP”, even though the relationship is shown to be negative. Measures and policies to enhance stable and conducive environments were recommended.
format	Article
author	Dankumo, Ali Madina Suryati Ishak, Oluwaseyi, Zubair Azeem Onisanwa, Idowu Daniel
spellingShingle	Dankumo, Ali Madina Suryati Ishak, Oluwaseyi, Zubair Azeem Onisanwa, Idowu Daniel Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria?
author_facet	Dankumo, Ali Madina Suryati Ishak, Oluwaseyi, Zubair Azeem Onisanwa, Idowu Daniel
author_sort	Dankumo, Ali Madina
title	Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria?
title_short	Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria?
title_full	Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria?
title_fullStr	Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria?
title_full_unstemmed	Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria?
title_sort	does okun’s law explain the relationship between economic growth and unemployment in nigeria?
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2019
url	http://journalarticle.ukm.my/14145/ http://journalarticle.ukm.my/14145/ http://journalarticle.ukm.my/14145/1/jeko_53%283%29-12.pdf
first_indexed	2023-09-18T20:06:26Z
last_indexed	2023-09-18T20:06:26Z
_version_	1777407189956165632

Does Okun’s Law explain the relationship between economic growth and unemployment in Nigeria?

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