Impact of Income Inequality on Poverty Level in Nigeria: Evidence from ARDL Model

Abstract

This study used the Auto Regressive Distributed Lag (ARDL) model to assess the effect of income disparity on the degree of poverty in Nigeria. Based on the association each income determinant showed with the Gini coefficient of income disparity in the Nigerian economy, the study's findings indicated that there is a long-run positive relationship between the poverty level and the Gini coefficient of income inequality in Nigeria. Therefore, it is advised to improve a more equitable distribution of wealth, which will effectively lessen income inequality and poverty in Nigeria. The government should concentrate its efforts on developing and implementing more realistic employment programs in Nigeria. Since the empirical results of this study have demonstrated that decreasing income disparity in Nigeria by an increase in the employment rate has not been sufficient. A more practical approach to employment would allow people to use their money to build wealth rather than just get by, which would increase the level of income distribution.