Factors of macroeconomic growth in Nigeria: wages demand, taxes, and entrepreneurship development
-
DOIhttp://dx.doi.org/10.21511/imfi.17(1).2020.21
-
Article InfoVolume 17 2020, Issue #1, pp. 242-252
- Cited by
- 978 Views
-
119 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This paper contributes to clarifying the scientific debate on the impact of entrepreneurship development and wages increases on Nigeria’s macroeconomic development. The main purpose of this research is to estimate the impacts, problems, and consequences between wages growth and the growth of a long-term relationship between wages and investment. The article deals with the current state of Nigeria’s macroeconomic indicators. The methodological tools for the research are the ARDL and DOLS methods, which were used to study the relationships between the macroeconomic indicators. The research period is 1987–2019. The research empirically confirms and theoretically proves that the country operates under unstable and uncertain conditions, so it is difficult to achieve macroeconomic stability. Also, the article presents the results of the analysis, which has shown a positive and statistically significant effect of raising the minimum wages on economic growth both in the long and short term. The study results can be useful for state authorities, private sector, as well as for the researchers.
Acknowledgements
This research was prepared as a part of the Scientific Project “Modeling the Transfer of Eco-Innovations in the Enterprise-Region-State System: Impact on Ukraine’s Economic Growth and Security” (No. 0119U100364), that is financed by the state budget of Ukraine.
- Keywords
-
JEL Classification (Paper profile tab)E24, L26, G31
-
References61
-
Tables7
-
Figures0
-
- Table 1. DOLS test for cointegration relationship in the equation
- Table 2. Estimated coefficients of the equation using DOLS approach-dependent variable
- Table 3. ARDL bound test for cointegration relationship
- Table 4. DOLS test for cointegration relationship
- Table 5. Estimated long-run coefficients using the ARDL Approach-Dependent variable
- Table 6. Error correction representation for the ARDL model
- Table 7. Model diagnostics and stability tests
-
- Ajayi. B. (2004). A Good Step for Nigeria’s, Revenue Service. Nigeria world. Toronto, Canada.
- Alesina, A., Ardagna, S., Perotti, R., & Schiantarelli, F. (2002). Fiscal policy, profits and investment. American Economic Review, 92, 571-589.
- Asteriou, D., & Hall, G. S. (2011). Applied Econometrics (2nd ed.). Palgrave Macmillan.
- Baumol, W. (1967). Productivity Growth, Convergence and Welfare. American Economic Review, 76, 1072-1085.
- Besanko, D. A., Braeutigam, R. R., & Gibbs, M. J. (2011). Microeconomics (4th ed.). New Jersey: John Wiley & Sons, Inc.
- Burkhauser, R. V., & Sabia, J. J. (2004). Why Raising the Minimum Wages Is a Poor Way to Help the Working.
- Card, D., & Krueger, A. B. (1995). Myth and Measurement; the Economics of the Minimum Wages. Princeton University Press: Princeton.
- Cavallo, M. (2005). Government employment and the dynamic effects of fiscal policy shocks (Federal Reserve Bank of San Francisco Working Paper 2005-16).
- Clemens, J., & Wither, M. (2014). The Minimum Wages and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers. (No. w20724). National Bureau of Economic Research.
- Cukierman, A., Rama, M., & Ours, J. V. (2001). Long-run Growth, the Minimum Wages and other Labor Market Institutions. Centre for Economic Research, Tilburg University.
- Dickens, R., Machin, S., & Manning, A. (1999). The Effects of Minimum Wages on Employment: Theory and Evidence from Britain. Journal of Labor Economics, 17(1), 1-22.
- Dube, A. (2013) Minimum Wages and Aggregate Job Growth: Causal Effect or Statistical Abstract. IZA DP No. 7674.
- Enders, W. (2004). Applied Econometric Time Series (2nd ed.). Wiley, New York.
- Engle, R. F., & Granger, C. W. (1987). Co-integration and Error Correction: Representation, Estimation, and Testing. Econometrica: Journal of the Econometric Society, 251-276.
- Fanti, L., & Gori, L. (2011). On Economic Growth and Minimum Wages (Munich Personal RePec Archive, MPRA Paper No. 25842).
- Feldmann, H. (2009). Government Size and Unemployment: Evidence from Developing Countries. Journal of Developing Areas, 43(1), 315-330.
- Fernàndez-de-Córdoba, G., Pérez, J. J., & Torres, L. J. (2009). Public and Private Sector Wages Interactions in a General Equilibrium Model (ECB Working paper Series, No 1099).
- Finn, M. (1998). Cyclical effects of government’s employment and goods purchases. International Economic Review, 393, 635-657.
- Folawewo, A. O. (2007). Macroeconomic Effects of Minimum Wages in Nigeria: A General Equilibrium Analysis (Paper Prepared for presentation at the CSEA Conference 2007: Economic Development in Africa, Oxford, 19-20 March).
- Freeman, R. B. (2000). Single Peaked vs. Diversified Capitalism: The Relation Between Economic Institutions and Outcomes (NBER Working Paper, 7556).
- Garrett, G. (2001). Globalization and Government Spending around the World. Studies in Comparative International Development, 35(4), 3-29.
- ISSER (2013). Policies and Options for Nigeria’s Economic Development. Legon: Institute of Statistical, Social and Economic Research, University of Ghana.
- Johansen, S. (1995). Likelihood-based Inference in Cointegrated Vector Autoregressive Models. OUP Catalogue.
- Johansen, S., & Juselius, K. (1990). Maximum Likelihood Estimation and Inferences on Cointegration – with Applications to the Demand for Money. Oxford Bulletin of Economics and Statistics, 52, 169-210.
- Johansen, S. (1991). Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models. Econometrica: Journal of the Econometric Society, 6, 1551-1580.
- Kim, H. M. (2018). Economic growth and tariff levels in the United States: A Granger causality analysis. Journal of International Studies, 11(4), 79-92.
- Lemos, S. (2004). The Effect of the Minimum Wages on Prices (IZA DP No. 1072).
- Lustig, N., & McLeod, D. (1996). Minimum Wages and Poverty in Developing Countries: Some Empirical Evidence. Brookings Discussion Papers in International Economics, 125.
- Magruder, J. R. (2013). Can Minimum Wages Cause a Big Push? Evidence from Indonesia. Journal of Development Economics, 100(1), 48-62.
- Mankiw, N. G. (2011). Principles of Economics (6th ed.). USA: South-Western Cengage Learning.
- McConnell, C. R., Brue, S. L., & Flynn, S. M. (2009). Economics: Principles, Problems, and Policies. Boston: McGraw-Hill, Irwin.
- Melnyk, L., Kubatko, O., Dehtyarova, I., Matsenko, O., & Rozhko, O. (2019). The effect of industrial revolutions on the transformation of social and economic systems. Problems and Perspectives in Management, 17(4), 381-391.
- Neumark, D. (2014). Employment Effects of Minimum Wages. IZA World of Labor 2014:6.
- Neumark, D., & Washer, W. (1994). Employment Effects of Minimum and Sub-minimum Wages: Reply to Card.
- Neumark, D., Schweitzer, M., & Wascher, W. (2005). The Effects of Minimum Wages on the Distribution of Family Incomes: A Nonparametric Analysis. Journal of Human Resources, 40(4), 897.
- Neumark, D., Schweitzer, M., & Wascher, W. (2004). Minimum Wages Effects throughout the Wages Distribution. Journal of Human Resources, 39(2), 425-450.
- Ofori-Abebrese, G. (2012). A Co-Integration Analysis of Growth in Government Expenditure in Ghana. Journal of African Development, 14(1). 47-61.
- Ogunwale, A. O., & Ekundayo, I. B. (2016). Wages Bill to Tax Revenue Ratio in ECOWAS Member States. A Paper Submitted to Regional Experience Sharing Workshop on Convergence Criterion.
- Okoye, L. U., Omankhanlen, A. E., Okorie, U. E., Okoh, J. I., & Ahmed, A. (2019). Persistence of fiscal deficits in Nigeria: examining the issues. Investment Management and Financial Innovations, 16(4), 98-109.
- Oputa, A. (2004). Oputa scores leaders low on citizen’s welfare. The Guardian. February 10th.
- Park, J. Y. (1990). Testing for Unit Root and Cointegration by Variable Addition. Advances in Econometrics, 8, 107-133.
- Pesaran, M. H., Shin, Y., & Smith, R. J. (2001) Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16, 289-326.
- Phillips, P. C. B., & Ouliaris, S. (1990). Asymptotic Properties of Residual based Tests for Cointegration. Econometrica: Journal of the Econometric Society, 165-193.
- Phillips, P. C. B., & Ouliaris, S. (1988) Testing for Cointegration Using Principal Components Methods. Journal of Economic Dynamics and Control, 12, 205-230.
- Rittenberg, L., & Tregarthen, T. (2011). Principles of Microeconomics.
- Sabia, J. J. (2014) Minimum Wages: A Poor Way to Reduce Poverty. CATO Institute. Tax and Budget Bulletin, 70.
- Saikkonen, P. (1992). Estimation and Testing of Cointegrated Systems by an Autoregressive Approximation. Econometric Theory, 8, 1-27.
- Shin, Y. (1994). A Residual-based Test of the Null of Cointegration against the Alternative of No Cointegration. Econometric Theory, 10(01), 91-115.
- Shkolnyk, I., Kozmenko, S., Kozmenko, O., & Mershchii, O. (2019). The impact of the economy financialization on the level of economic development of the associate EU member states. Economics and Sociology, 12(4), 43-58.
- Sotnyk, I., & Kulyk, L. (2014). Decoupling analysis of economic growth and environmental impact in the regions of Ukraine. Economic Annals-XXI, 7-8, 60-64.
- Stock, J. H., & Watson, M. W. (1988). Testing for Common Trends. Journal of the American Statistical Association, 83, 1097-1107.
- Stock, J. H., & Watson, M. W. (1993). A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems. Econometrica: Journal of the Econometric Society, 783-820.
- Tagkalakis, A. (2009). Fiscal adjustment: do labor and product market institutions matter? Public Choice, 139, 389-411.
- Taylor, J., & Selgin, G. (1999). By our Bootstraps: Origins and Effects of the High-Wages Doctrine and the Minimum Wages. Journal of Labour Research, 20(4), 447-462.
- Uwuigbe, O. R., Omoyiola, A., Uwuigbe, U., Lanre, N., & Ajetunmobi, O. (2019). Taxation, exchange rate and foreign direct investment in Nigeria. Banks and Bank Systems, 14(3), 76-85.
- Varian, H. R. (2010). Intermediate Microeconomics: A Modern Approach (8th ed.). New York: W. W. Norton & Company.
- Vuillemey, G. (2008). The Economic Effects of the Minimum Wages. IEM’s Economic Note, 1-4. Wages Indicator Foundation.
- Watanabe, M. (2013). Minimum Wages, Public Investment, Economic Growth. Theoretical Economic Letters, 3, 288-291.
- Whaples, R. (2006, November). Do Economists Agree on Anything? Yes! Economist’s Voice, 3, 9.
- World Bank (2014). World Development Indicators. Washington, DC: World Bank.
- Zhuravka, F., Makarenko, M., Osetskyi, V., Podmarov, O., & Chentsov, V. (2019). Impact of politically generated shocks on monetary performance: a cross-country comparison. Banks and Bank Systems, 14(3), 99-112.