Migration, unemployment, income, and dollar exchange rate: An application of the bounds testing approach to cointegration

Abstract

This paper investigates the nature of the causal relationship between migration and three macroeconomic indicators, GDP per capita,  unemployment and Dollar exchange rate in Nigeria using autoregressive distributed lag (ARDL ) bounds testing procedure and granger-causality within vector error correction model (VECM ) based on monthly data (2000 – 201 ). Result of ARDL shows that there is a long-run equilibrium level relationship. A critical examination of the granger-causality test reveals the existence of a long-run bidirectional causality between migration and GDP, migration does not cause unemployment but evidence shows that unemployment causes migration .Besides, evidence also showed that exchange rate granger causes migration, whereas migration does not seem to cause exchange rate. meaning that unemployment and the high Dollar exchange rate are some of the reason why Nigerian citizens are exiting the country in mass.

Keywords: Migration, ARDL, Dollar exchange rate ,Granger-causality, Unemployment