Munich Personal RePEc Archive

Effects of Human Capital Investment on Unemployment Volatility in Nigeria (1981-2015)

Kenny S, Victoria (2019): Effects of Human Capital Investment on Unemployment Volatility in Nigeria (1981-2015).

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Why do more educated workers experience lower unemployment rates and lower employment volatility? A closer look at the data reveals that these workers have similar job finding rates, but much lower and less volatile separation rates than their less educated colleagues. Therefore, this study examines the Effects of human capital investment on unemployment Volatility in Nigeria from 1981-2015 with a primary focal objective on the composition of human capital investment in Nigeria. We show that investments in match-specific human capital reduces the outside option of workers, implying less incentive to separate and thus longer job spells. The theoretical model generates unemployment dynamics that are consistent with the observed patterns for unemployment, separation and job finding rates across education groups. While the Error correction result revealed that Government current investment in human capital in terms of spending on education needs to increase in quantum for its significance to be meaningful. Hence, the government needs to put more effort in human capital investment in order to reduce unemployment rate in Nigeria.

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