THE IMPACTS OF UNEMPLOYMENT AND INFLATION ON HUMAN CAPITAL DEVELOPMENT IN NIGERIA

Abstract

Over the years, the first and second world countries in the world have continued to witnessextra ordinary improvement in the quality of human capital which accelerated economicgrowth and development of these countries in the long run. But Nigeria and other developingcountries are yet to enjoy these accelerated economic growth and development, and this maylikely stem from the fact that Nigeria and other developing countries ranked low in humandevelopment index. This poor human development index may likely depend on high rate ofinflation and unemployment in Nigeria. Therefore, the study investigated the impacts ofunemployment and inflation on human capital development in Nigeria. The study was aneconometric study which relied on time series dataset from secondary sources including UnitedNation (2022) human development index report, and World Bank (2022) historic data – macrotrendson unemployment rate, hunger statistics, inflation rate and consumer price index. Humandevelopment index was used to measure human capital development, unemployment rate andhunger statistics were used to measure unemployment, while inflation rate and consumer priceindex were used to measure inflation. The data collected was analyzed using ordinary leastsquare linear model. Results of the study indicated that: (1) There is significant negative effectof unemployment on human capital development, as revealed by the two measures ofunemployment used in the study. (2) There is no significant effect of inflation on human capitaldevelopment, although the two measures of inflation used in the study revealed negative andpositive effects respectively. The researcher recommends that government in Nigeria need tostrategically partner with the organized private sector and international non-governmentalorganizations to invest in small and medium scale enterprises to create employmentopportunities and reduce unemployment. This will have a multiplier effect in respect of hungerreduction and control of inflation in Nigeria.