A Single-Equation ECM Model of Government’s Investment in Human Capital and Income Inequality in Nigeria
Article Sidebar
Page Numbers:
205-220
Digital Object Identifier:
10.58578/kijst.v1i1.3572
Viewed: 301 times
Downloaded: 142 times
LYAS Publisher cordially invites qualified professionals to serve as Editors or Reviewers. Your expertise will make an important contribution to maintaining and strengthening the academic quality of our publications. Interested applicants are kindly requested to complete the application form at the following link: Editors & Reviewers
Please feel free to contact us if you need any further information about the submission process or if you have any additional questions.
Authors:
Mathew Stephen1, Danjuma Idi2 
Copyright :
Authors retain copyright and grant the journal right of first publication.
Main Article Content
Abstract
This study investigates the impact of government investment in human capital on income inequality in Nigeria using a Single-Equation Error Correction Model (ECM) approach from 1985 to 2023. The analysis involves pre-estimation checks for stationarity and lag order selection, ensuring the methodological robustness of the model. The results indicate stationarity of the variables post-differencing, affirming the reliability of the model. The Parsimonious ECM reveals that increased education expenditure significantly reduces income inequality coefficient of -0.099 (p < 5%), while higher agricultural spending coefficient of 0.078 (p < 5%) leads to a slight rise in inequality. Health expenditure shows no significant impact. The Error Correction Mechanism coefficient of -0.471 (p < 5%) highlights the importance of addressing deviations from long-term equilibrium to reduce income inequality. This study recommends amongst others the significance of targeted policies for education and sustainable agriculture to promote equitable income distribution and economic stability in Nigeria.
Citation Metrics:
Downloads
Article Details
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
References
Banerjee, A., Dolado, J. J., Galbraith, J. W., & Hendry, D. F. (1993). Cointegration, error correction, and the econometric analysis of non-stationary data. Oxford University Press.
Coady, D., & Dizioli, A. (2018). Income inequality and education revisited: persistence, endogeneity and heterogeneity. Applied Economics, 50(25), 2747-2761.
Engle, R. F., & Granger, C. W. J. (1987). Co-integration and error correction: Representation, estimation, and testing. Econometrica, 55(2), 251-276.
Langnel, Z., Amegavi, G. B., Donkor, P., & Mensah, J. K. (2021). Income inequality, human capital, natural resource abundance, and ecological footprint in ECOWAS member countries. Resources Policy, 74, 102255.
Ogunjobi, J. O., Asaleye, A. J., Awe, A. A., & Iseolorunkanmi, O. J. (2022). Implications of human capital formation on output and employment: evidence from Nigeria. Asian Economic and Financial Review, 12(1), 47-57.
Pinshi, C. P. (2020). Rethinking error correction model in macroeconometric analysis: A relevant review. Journal of Applied Economic Sciences (JAES), 15(68), 267-274.
Sarkodie, S. A., & Adams, S. (2020). Electricity access, human development index, governance and income inequality in Sub-Saharan Africa. Energy Reports, 6, 455-466.
Shahabadi, A., Nemati, M., & Hosseinidoust, S. E. (2018). The Effect of Education on Income Inequality in Selected Islamic Countries. International Journal of Asia-Pacific Studies, 14(2).
Thye, G. L., Law, S. H., & Trinugroho, I. (2022). Human capital development and income inequality in Indonesia: Evidence from a nonlinear autoregressive distributed lag (NARDL) analysis. Cogent Economics & Finance, 10(1), 2129372.
Yuldashev, M., Khalikov, U., Nasriddinov, F., Ismailova, N., Kuldasheva, Z., & Ahmad, M. (2023). Impact of foreign direct investment on income inequality: Evidence from selected Asian economies. Plos one, 18(2), e0281870.