Acta Universitatis Danubius. Œconomica, Vol 13, No 5 (2017)

Abstract

This study investigates the impact of unemployment on economic growth in Nigeria in the 21^st century using a Vector Autoregressive (VAR) approach from 1986-2015. It aimed at examining the dynamic effect of unemployment on growth in the context of Nigeria using the VAR to analyse the variations. Different methods such as the Augmented Dickey Fuller (ADF) test, johansen cointegration test, VAR model, impulse response test and variance decomposition test were employed to analyse the data. It was observed that the impact of unemployment vary over time as effort towards eradicating it are been made by the government in the country. The implications of the study are that, it informs researchers on VAR model as an appropriate approach for dynamic analysis, academicians to be more informative on the dynamic effects of unemployment in the economy, and the government on the appropriate policy to adopt to tackle the issue of unemployment and inflation in the country. The study therefore recommends that there should be an increase in government expenditure towards enhancing the skills of individuals to reduce unemployment and inflation.