Cohort Size and Unemployment Rate: New Insights from Nigeria

Abstract

The debate on the nature of the relationship between cohort size and unemployment rate has been widely studied and generated a substantial body of literature in labor economics discourse. However, an in-depth reading of this literature suggests that, besides the fact that findings are mixed and do not provide conclusive evidences, one hardly ever comes across studies exclusively on African countries. Likewise, generalized studies across countries employing pooled data seem to dominate the literature. In light of these, the current study examines the nature of the said relationship, over the period 1970–2019, in Nigeria in a multivariate and dynamic framework. Employing Bounds testing procedure, the article finds that both the short-run and long-run impacts of cohort size on overall unemployment rate are positive and statistically significant. This suggests that aggregate unemployment rate tends to be higher when many young people supply labor. In view of these findings, the article recommends that government should collaborate with private sector to develop and implement functional microcredit schemes. Such schemes should be flexibly structured to avert institutional bottlenecks and enhance accountability and transparency in their management.