Explaining Nigeria's Economic Growth through the Minimum Wage Policy

  • Ifeoluwa B. Babalola Department of General Studies, Moshood Abiola Polytechnic, Abeokuta, Nigeria
  • Abayomi A. Adebayo Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria
  • Abiodun A. Adegboye Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria
Keywords: Minimum Wage, Economic Growth, Productivity, Nigeria


The study investigated the relationship between wage policy and output in Nigeria from 1981-2018. The study utilised the Autoregressive Distributed Lag mechanism on the variables of interest such as minimum wage, investment, lending interest, credit to the private sector, inflation and economic growth. The result showed there was evidence of a positive relationship between minimum wage and investment in the short and long runs.  Also, there was evidence of a positive relationship between minimum wage and economic growth in the long run only. In addition, the growth impact of minimum wage reduced in the long-run as more potential growth improving variables were examined. Therefore, the study concluded that upward review of wages is a necessary but not a sufficient income policy for the Nigerian economy. Hence, the study recommends periodic and consistent review of wages that is consistent with the stipulated time frequency of 5 years; with provision for wage indexation and complementary investment related expenditures to cushion the negative unemployment and inflationary effect of minimum wage policy in Nigeria.


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