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Article Title:
Effect of Unemployment and Inflation on Wages in Nigeria
by Auwal Abubakar Muhammad; Bello Malam Sa'idu; Obinna John Nwokobia & Kabiru Musa Yakubu

Abstract:
The twin macroeconomic variables that are significant in influencing wages in developing economy are; inflation and unemployment. Therefore, this paper examines the effect of unemployment and inflation on wages. To achieve the set objective, three models, namely; Ordinary Least Square (OLS) method, Augmented Dickey-Fuller (ADF) technique and Granger causality test were thoroughly subjected to quantitative analysis. The result of the regression revealed that the coefficient of unemployment is positive and statistically significant which implies that unemployment significantly influence wage rate whereas inflation is positive but has no significant effect on wage rate. Moreover, result of the unit root indicates that all the variables in the model are stationary while, the result of causality test suggests that unemployment Granger causes wage rate and not inflation. This work is of practical significance in terms of economic policies likely to minimize inflationary spiral and unemployment rate in the country and theoretically, it contribution to the understanding of long?run nature of the variables. Also, it will trigger future researches and re-awaken government on its social responsibilities. Thus, the major policy implication of these results is that concerted efforts should be made by policy makers to increase the level of employment opportunities by diversifying the economy. Also, payment of unemployment benefits by the government and promoting vocational education so as to minimize the rate of unemployment.

Keywords: Unemployment, Inflation, Wage rate; Granger causality, ADF

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