Trade Policy Reforms and Sectoral Employment in Nigeria

Abstract

Trade policy change concomitant with aggressive outward orientation was a major bedrock of Structural Adjustment Programme (SAP) adopted by Nigeria in 1986. Trade reform has clear implications for the overall economic performance, in terms of either employment creation or destruction as well as labour reallocation. Against this backdrop, this study examined the empirical relationship between trade liberalisation and sectoral employment in Nigeria using time-series macroeconomic data from 1986 to 2008. Three key sectors of the economy covered by the study are manufacturing, agriculture and services.
The study employed Ordinary Least Squares to measure the impacts of trade liberalisation on sectoral employment. The result revealed that the trade liberalisation impact on employment differed across sectors; and that trade reforms have no significant effect on sectoral employment during the period covered. The study recommended that trade liberalisation should be embedded in a coherent set of macroeconomic, structural and social policies in order to be successful in terms of employment generation. Also, active labour market policies should be put in place and underscored to facilitate adjustment to changes in production structure brought about by trade and trade reforms.

Keywords: Trade liberalisation, Sectoral employment, Ordinary least squares, Serial correlation.
JEL Classification: F16, J21, J23.