The Nexus Between Trade Openness, Gender Gaps and Unemployment in Nigeria

Abstract

Unemployment is a major concern for developing countries such as Nigeria, despite the deployment of several policy measures to address the challenge. Although trade is a major driver of growth and job creation, addressing unemployment remains daunting, and women are more vulnerable. This study examines the impact of trade openness and labour market gender gaps on unemployment in Nigeria using a time series analysis covering the period 1991 to 2021. This study specifically relies on co-integration and vector error correction models to analyse the long- and short-run relationships. The long-term analysis revealed the existence of a co-integrating association among unemployment, trade openness, gender gaps, and the other independent variables. The estimates indicate that trade openness negatively and significantly affects unemployment. However, the short-run estimates showed that real wages negatively and significantly impact unemployment. In contrast, the male-female labour force ratio (an indicator of the gender gap) negatively and significantly affected Nigeria's unemployment. The coefficient of trade openness was negative but statistically insignificant in the short run. The results make a case for pursuing more liberal trade policies that can complement other job-creating initiatives of the government. In addition, a move toward more market-reflective wages could be considered, while gender gaps in the labour market need to be addressed by creating more opportunities for women.