Impact of Oil Revenue on Unemployment in Nigeria : Evidence from ARDL and Quantile Regression Methods

This study examines the effect of oil revenue on unemployment in Nigeria over the period of 1970 and 2018. We examine the direct, indirect and distributional effects of oil revenue on unemployment using Autoregressive Distributed Lag (ARDL) and Quantile Regression (QR). The direct effect results from ARDL estimation show that oil revenue reduces unemployment only in the long-run. The indirect effect results reveal that oil revenue appears to worsen unemployment. Therefore, whether oil revenue would reduce unemployment or not depends on oil price. The results are robust when we use oil rents as a proxy for oil revenue. The QR results depict that the effect of oil revenue on unemployment varies over different quantiles, worsening effect at the lower quantiles and reducing effect at the upper quantiles. Given our results, it is expedient for the government to design a proper plan to manage oil revenue for growth and employment creation