Do Electricity Generation and Consumption Reduce Unemployment in Nigeria? A Nonlinear Autoregressive Distributed Lag (NARDL) Investigation
Abiola Adekunle Ishola
*
Emerald Energy Institute, University of Port Harcourt, Nigeria.
Anthony Ibe
Emerald Energy Institute, University of Port Harcourt, Nigeria.
Eseosa Omorogiuwa
Emerald Energy Institute, University of Port Harcourt, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
This study investigated the impact of electricity generation and consumption on unemployment in Nigeria over the 1990 to 2023. In order to achieve the purpose of the study, electricity generation and consumption were captured by quantity of electricity generated, electricity consumed, access to electricity and electricity tariff while unemployment was measured by unemployment rate. Annual time series data were used and sourced from World Development Indicators of Nigerian Electricity Regulatory Commission (NERC) Reports, National Bureau of Statistics (NBS) Reports and World Development Indicators of the World Bank. The major technique of data analysis adopted is non-linear autoregressive distributed lag (NARDL) regression technique. The key findings revealed that evidence of long-run asymmetry in the effect of quantity of electricity generation on unemployment rate in Nigeria exists; negative shocks in quantity of electricity generation increase unemployment in the long run, exerting stronger impacts than positive shocks; there is no long-run asymmetry exists in the effect of electricity consumption on unemployment rate while short-run asymmetries effect of electricity consumption on unemployment rate are statistically insignificant; access to electricity shows no significant long-run or short-run asymmetric relationship with unemployment rate, and; electricity tariffs have a short-run asymmetric impact on unemployment rate but while positive shocks in electricity tariffs raise unemployment in the long run, Negative shocks in electricity tariffs reduce unemployment, with multiple lagged effects also statistically significant. The study concluded that there is presence of a long-run asymmetric relationship between electricity dynamics (electricity generation and consumption) and unemployment rate in Nigeria. It was recommended among others that government should develop a national framework that incentivizes investments in decentralized renewable energy (e.g., solar mini-grids) to reduce dependence on the central grid and mitigate the asymmetric economic shocks from electricity disruptions.
Keywords: Electricity disruptions, electricity dynamics, electricity tariff, health impacts