THE IMPACTS OF UNEMPLOYMENT AND INFLATION ON HUMAN CAPITAL DEVELOPMENT IN NIGERIA

Abstract

Over the years, the first and second world countries in the world have continued to witness extraordinary improvement in the quality of human capital, which accelerated economic growth and development of these countries in the long run. But Nigeria and other developing countries are yet to enjoy these accelerated economic growth and development, and this may likely stem from the fact that Nigeria and other developing countries rank low in the human development index. This poor human development index may likely depend on the high rate of inflation and unemployment in Nigeria. Therefore, the study investigated the impacts of unemployment and inflation on human capital development in Nigeria. The study was an econometric study which relied on time series data sets from secondary sources, including the United Nations (2022) Human Development Index report and World Bank (2022) historic data—macro trends on unemployment rate, hunger statistics, inflation rate, and consumer price index. Human Development Index was used to measure human capital development; unemployment rate and hunger statistics were used to measure unemployment, while inflation rate and consumer price index were used to measure inflation. The data collected were analyzed using the ordinary least squares linear model. Results of the study indicated that: (1) there is a significant negative effect of unemployment on human capital development, as revealed by the two measures of unemployment used in the study; and (2) there is no significant effect of inflation on human capital development, although the two measures of inflation used in the study revealed negative and positive effects respectively. The researcher recommends that the government in Nigeria needs to strategically partner with the organized private sector and international non-governmental organizations to invest in small and medium-scale enterprises in order to create employment opportunities and reduce unemployment. This will have a multiplier effect with respect to hunger reduction and the control of inflation in Nigeria.