Al-Hikmah University Journal

The study investigated the effects of unemployment on economic growth and the agricultural, industrial and services sectoral output growth. To achieve this, economywide output growth and sectoral output growth models were specified, using the neoclassical theory-based economy-wide and sectoral growth accounting equations as the main theoretical framework. In addition to the unemployment rate, 5 control variables (viz: labour force growth, private capital stock growth, foreign direct investment, government expenditure and literacy rate) were also included in all equations while the 3 sectoral output growth variables for the agricultural, industrial and services sector were the dependent variables. The OLS estimation method was employed, appropriate diagnostic tests were carried out, and remedial econometric measures were adopted to ensure the validity of the model estimates. Annual data covering the period of 1999 to 2022, sourced from the CBN, the World Bank and the IMF databases were employed in the analysis. It was found from the study that unemployment has a negative effect on economic growth as well as output growth in each of three sectors (viz: agricultural, industrial and services). Based on this finding, it is recommended that the authorities formulate and implement policies that will reduce the unemployment rate