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POVERTY AND INCOME INEQUALITY IN NIGERIA (1980- 2017)
A b s t r a c t
This study examined the relationship between poverty and income inequality in Nigeria within the period 1980- 2017. Adopting the OLS, unit root, co-integration, ECM and Granger causality test to analyze the data from the CBN Statistical bulletin and World Bank, the study specifically determined how poverty, unemployment and life expectancy at birth affects inequality in Nigeria. The OLS result shows that 82% of the changes in the dependent variable (inequality) are explained by the independent variables (national poverty index, unemployment rate and life expectancy at birth). The Fvalue of 52.293 with the probability value of 0.000000 indicates that the overall model was statistically significant at 5% level. The OLS result further indicated that national poverty index was positively related to inequality but statistically not significant. Unemployment rate was positively related to inequality but not statistically significant at level. Furthermore, all the variables were stationary and show evidence of long run relationship. Meanwhile, the estimated ECM result revealed that the variation in inequality is explained by life expectancy at birth, national poverty index and unemployment rate was 67%. The coefficient of the ECM was negatively signed, adjusted the short run deviation to long run equilibrium position at the speed of 53%.The F-Statistic value of 22.09833 with the probability value of 0.001213 shows that the overall model was significant at 5% level while the Durbin –Watson value of 2.03 indicates lesser degree of serial autocorrelation. Thus, the estimated parsimonious ECM result depicts that poverty and unemployment have positive significant relationship with inequality. It was established that as poverty and unemployment rate increased, inequality increased correspondingly, inferring close links among the variables. Moreover, the Pair wise causality test results revealed a bi-directional causality between poverty and inequality over the period of the study indicating that both of them can be used in predicting the changes in the other. Based on the findings, it was recommended that deliberate effort should be made by government to creating employment opportunities as a major tool in order to combat poverty and inequality in Nigeria.
Keywords: Poverty, Inequality, Unemployment, Life expectancy at birth.