Effect of Public Infrastructure Expenditure on Unemployment in Nigeria

Abstract

This study examines the effect of public infrastructure on unemployment in Nigeria from 1990 to 2024, focusing on the disaggregated public infrastructures such as road and construction, education, health, communication, and security infrastructure expenditures. The study is motivated by Nigeria’s persistent unemployment challenge and the importance of infrastructure in improving economic opportunities, productivity, and labour-market outcomes. Annual time-series data were obtained from the World Bank’s World Development Indicators (WDI). The study employs the Autoregressive Distributed Lag (ARDL) approach to investigate both the short-run and long-run relationships between the infrastructure expenditure variables and the unemployment rate. The findings indicate that road and construction infrastructure expenditure has a negative and statistically significant effect on unemployment in both the short and long run. Education infrastructure expenditure also exhibits a significant negative relationship with unemployment, while health infrastructure expenditure has a significant negative long-run effect. Communication infrastructure expenditure demonstrates a significant negative long-run effect, although its short-run effect is statistically insignificant. Security infrastructure expenditure does not have a statistically significant effect on unemployment in either the short or long run. The study therefore concludes that targeted investment in road and construction, education, health, and communication infrastructure can contribute to reducing unemployment in Nigeria. It recommends prioritizing infrastructure investments that simultaneously expand economic activity, improve human capital, strengthen labour productivity, and facilitate access to employment opportunities.