An Econometric Analysis Of The Impact Of Urbanization And Unemployment On The Development Of Nigerian Economy

Project and Seminar Material for Economics

Project and Seminar Material for Economics


The problems that are associated with urbanization in Lagos State had not been over-looked by policy makers, however, the formulated policies that were targeted towards combating the products of urbanization has not been effective enough.

The consequential objective of this research work is to examine the various policies and to determine the effect of these policies. However, ways at which combating unemployment and other shortcomings brought by urbanization was established.

In the course of this research work, data were collected from Annual and account report of companies by the use of multiple regression analysis, which could be of assistance in ascertaining the impact of urbanization in Lagos State. After manipulating these figures, the result showed that relationship exists between them.

The findings of this study reveals that population rate of Lagos State increased, the unemployment rate also increased.

In conclusion, it should also be stated that the rate at which people moved into Lagos State should be checked using appropriate and effective policies, in order to reduce the rate of unemployment.

Chapter One


1.1 Background To The Study

Urbanization is a social process or change whereby a sizable proportion of the population of a country live in the cities Onah (2001) observed that urbanization no longer denotes merely the process by which persons are attracted to a place called the city and are incorporated into its system of life; it rather refers to that cumulative accentuation of the characteristics, distinctive of the mode of life, which is associated with the growth of cities or urban areas, and finally

to the changes in the direction of the mode of life recognized as urban which are apparent among people. Also, the new Encyclopedia Britannian (1995) defines urbanization as the process by which large a number of people become permanently concentrated In relatively small a area, forming urban areas.

From the foregoing, it can be deducted that urbanization denotes the movement of people from rural areas concerned chiefly with agriculture to other large urban area whose activities are primarily centered on government, trade, manufacture or allied interest.

According to Tacoli (1998) urban dwellers are thought to engage primarily in industrial production and services. In censuses and other statistical exercises, urban population is usually defined by residence in settlements above or below a certain size. In Nigeria, an urban center was defined for the purpose of the 1991 census, as a settlement with 20,000 or more people (Nigeria Migration and Urbanization Survey 1993). In Philippines, urban area are defined by the national census as all settlements with a population density or at least 500 persons per square kilometer (Manning and Jayasunya 1996).

Urban areas are seen as places with relative abundance of blue-collar jobs and urban dwellers are thought to be welldeserved, well fed and well exposed to modern civilization than rural dwellers. According to 200mers and Kleinpenning (1996), the high cost of food and peripheral village show a strong involvement in the food chain in urban areas. Urban areas have large-scale farms and enterprises, which could be public or private, owned. Urban labour market can be divided into formal and informal sectors (Mazumdar, 1989) wages in the formal sector are relatively high and are in a sense protected from being negotiated down ward by employers of lower ­income labour in the urban informal sector. Mazumdar (1999) points out that the informal sector is easy to enter. The urban informal sectors include casual labour hired by the day.

Workers in fields like transportation and construction owners of small establishments. The formal sector includes public and large-scale firms and private large enterprises, and public establishments. Economic activities present and., foods from rural areas to urban areas. These economic activities lead to large markets for marketing of products in large quantities, exposure social amenities like good roads, good electrification, easier communication good water supply facilities, good housing, proper sanitation, and so on. According to Simelane (1995), the location of more service points supplying a variety services to the urban areas attracts rural dwellers thereby contributing to rural-urban migration. The location of such service supply points for agricultural inputs and consumer goods in the rural area will play a crucial role in rural development and thereby reduce rural urban migration which is the main cause of urban youth unemployment.

1.2 Statement Of Problem

In a context of declining growth and economic restructuring the employment situation in Africa has became critical and labour absorption problematic. In particular, the problem of what is generally referred to as youth unemployment has increasingly come to be recognized as one of the series socio-economic problems currently confronting many developing countries, especially those in Africa (Curtain 2000, 120 1999). However, statistics showed that Africa, compared to other regions of the world has the largest segment of youth

in her population being 36.7 percent in the year 2000 compared to 27.3 percent for the world (Curtain, 2000). In absolute terms. It is estimated that there are presently about 122 million youths on the African continent (Chigunta 2002). During the early years of independence in the 1960’s and 1970’s, young people do not pose a serious social problem. Unemployed youths were therefore not a major target for government and funding agencies. Since then, however, concerns have been rising over the socio-economic situation of young people and the prospects of creating additional livelihood opportunities for them (Gibson, 1990). Urban youth unemployment is an important dimension of the widespread unemployment which is a major problem facing Nigeria. With a stagnant economy and low economic growth rates, demand for labour has been declining resulting in high levels of urban youth Unemployment.

1.3 Aim And Objectives

The main objective of this study is to empirically examine the impact of urbanization and unemployment on economic development. This main objective could be broken into the following specific objectives.

  1. To examine the effect of the drift to urban areas on the growth rate of unemployment in Nigeria.
  2. To examine the trends of unemployment on the economic development.
  3. To investigate the relationship between urbanization and the level of output

1.4 Research Questions

The following research question well be review in this research work.

  1. What are the causes of the Increase in urbanization in Nigeria?
  2. What relationship exist between the unemployment and increase in urbanization dwellers?
  3. What are the effects of unemployment on economic development?
  4. What are the contributions of the government in ameliorating increases in urbanization and unemployment?
  5. Does the private sector help in creating employment opportunity to combat the increase in urban dwellers?
  6. What is the government’s effort in developing the rural areas?
  7. Urbanization and social amenities.

1.5 Research Hypotheses

The following hypothesis will be used in the course of this study.

  1. Ho: That there is no significant relationship between in urbanization rate unemployment in Nigeria
    HI: That there is significant relationship between urbanization and unemployment in Nigeria.
  2. Ho: That there is no significant relationship between unemployment and economic development.
    HI: That there is significant relationship between unemployment and economic development .
  3. Ho: That there is no significant relationship between urbanization and the level of output.
    H1: That there is significant relationship between urbanization and the level of output.

1.6 Methodology Of The Study

The researcher will employ the use of econometric analysis to test for the relationship between dependent and independent variables. The R, R2, D.W. e.t.c.

Materials or data used in this study is basically secondary in nature. Data shall be collected from the annual reports federal office of statistics, Central Bank of Nigeria statistical bulletin. Data’s shall also be collected from relevant textbook journals, magazines and any other relevant literatures.

Data are also collected from Annual Report and Account, Report of Companies. Data analysis would be done through multiple regression analysis. Moreover a structure Ingression analysis would be used to determine, the impact of the urbanization and unemployment on the economy.

1.7 Significance Of Study

The research will evaluate the impact of urbanization and unemployment with emphasis placed on its applicable in the Nigerian economy. It will also help the Nigerian government evaluate the level of unemployment in the economy by finding solutions to the problems. The study would give an insight into the trade off between increase in urban dweller and unemployment. The recommendation(s) of this work will assist individuals, firms and the government.

1.8 The Scope And Limitation Of The Study

This study will cover the period of 30 years between 1980- 2009 on the impact of urbanization and unemployment in Nigeria.

The constraints are lack of enough time information (data) which limited (slow) down the pace of this study.

1.9 The Definition Of Terms / Concepts

Urbanization: This is a fiscal growth of an urban areas as a result of global change. This is also defined by the United Nations as movement of people from urban to ruler area with population growth, equating to urban migration.

Unemployment: This can be defined as a situation whereby able body persons with basic and requisite qualifications are unable to find jobs in order to commensurate their skills. The unemployment rate is expressed as:

Ur = Total Number of Unemployed x 100%

Total number in labour source

SAP: Full meaning of the term SAP is Structural Adjustment Programme. This programme originally was designated to cover the period from July 1986 to since 1988. This is to effectively alter and realign aggregate consumption and production patterns so as to minimize dependence on imports, enhance the non-oil export base and bring the economy back on the part of steady and balanced growth.

Growth: This an aspect of economics that deals with national income objectives the raising of the income level in rich countries is know as economic growth. This also stimulates improvement incomes and output from the analysis; it is evident that growth is a necessary but not a sufficient condition for attaining development.

Tariff: This a tax imposed on imported goods. It is also called customs duty. At time, a customs duty is levied much per unit of product. Sometimes it is levied as a percentage of the value of the product. Previously is known as specific tariff while the presently is known as advalore tariff. The higher the tariff rate, the more restrictive the tariff. Obviously, if the tariff rate is not reduce or cut down, it may stop all imports of such item.

1.10 Organization Of The Study

The organization of this study will take the following from chapter one deal with introduction, objective of the study, research hypotheses methodology of the study.

Chapter two deals with literature review contain urbanization and unemployment. Chapter three will be structural composition of the study. Chapter four deals with research methodology data analysis, and interpretation of results.

Chapter five deals with summary, conclusion and recommendation of the study.

An Econometric Analysis Of The Impact Of Urbanization And Unemployment On The Development Of Nigerian Economy

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An Econometric Analysis Of The Impact Of Urbanization And Unemployment On The Development Of Nigerian Economy


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