Trade Openness and Employment Growth in Nigeria

This study sought to find the impact of trade liberalization on employmentgrowth in Nigeria from 1981-2016 using trade openness as proxy fortrade liberalistion. A three-prong estimation approach was adopted. Inthe first stage, the descriptive statistic was examined in order tounderstand the nature of the series. The stationarity of the variableswere also tested using Augmented Dickey fuller test. The result indicatedthat all the variables were stationary at first difference which necessitatedthe deployment of the Johansen co-integration and Vector errorcorrection model for both the long-run and short-run nexus amongstthe variables in the second stage. The Toda Yamoto test was alsoconducted to ascertain the direction of causality. In order to determinethe ripple effect of the introduction of economic shock, the ImpulseResponse Function was deployed. In the post-estimation stage, therobustness and validity of regression model is checked using theHeteroscedasticity and the autocorrelation tests. The study found a negative and significant relationship between trade openness andemployment growth. The foreign direct investment had significant impacton employment levels. Inflation although significant was negativelyrelated. Both the exchange rate and terms of trade were not significant.The result of Breusch-Godfrey Serial Correlation LM Test reveals theabsence of serial correlation. The government should enact the provisionof social and economic policies required to protect the country againstthe adverse effects of lowered trade barriers especially in the labourintensive sector of the economy