Income Inequality and Unemployment Governance in Nigeria

Published: 2021-07-28 08:55:07
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Category: Society

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The different human capital stocks that every individual in a society has creates disparity in opportunity, particularly in the living environment. As the educational level of individuals raises, the ability for maximizing opportunities and, in return, income also usually increases, Muller, (2002), OECD, (2000); Abdullah et al, (2015), Yang and Qui, (2016). However, an increase in the education of an individualr’s involvement in the labor force gives them more advantage in the labor market. Thus, Park, (1996), argued that an increase in education level eliminates income inequalities in the labor market by for an individualr’s more chances of employment. However, as long as training services are rendered to individuals in a country equally and fairly, well-educated individuals can prolong their capital stocks and gain higher incomes, but individuals with fewer levels of education must settle for less income.
This situation, observed mostly in underdeveloped countries, to separates the income distribution particular to the training factor and causes injustice in the context of the labor environment rather than the production industries Ferreira, (2001) Afonso et al, (2010). In a study conducted by Fields, (1980) analyzing cross-sectional data collected from Latin America, Asia, and Africa. The outcomes revealed that education level generates differences in the poverty rate at the rural and urban level. Sylwester, (2000) also indicated that public education expenditure increases income inequality by reducing short-term economic growth, but that education expenditure affects economic growth and income distribution are positively significant in the long-term. Moreover, another study conducted by Sylwester, (2002) examining data from 50 countries between 1970 and 1990. He concluded that public education expenditure positively decreases to income inequality gap. Ferdi Celikay, (2016) conducted a study of 31 European countries for the period 2004-2011. The results revealed that a one percent increase in education raises the income inequality (Gini coefficient) by 0.20 percent in the short-run and reduce it by 0.20 percent in the long-run.
Therefore, an increase in the level of education affects income inequality negatively. Palaz et al, (2013) also confirmed that having primary education negatively affects income inequality but higher school education reduces the negative effects on income inequality. Several empirical studies have indicated that education expenditure or an increase in education level reduce the level of income inequality. This study will include the education level in its model for the second objective in determining the causes of income inequality in Nigeria in both the short- run and long-run.

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