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Institutions, regulatory framework and labour market outcomes in Nigeria

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Abstract

This paper examines the impact of two major pronounced institutional and regulatory measures, minimum wage and labour union, on labour market outcomes in Nigeria with particular focus on aggregate employment and unemployment, as well as sectoral employment and wage effects. The effect of minimum wage is captured using aggregate and sectoral Kaizt-type minimum wage index, while that of labour union is measured by union density. Static and dynamic analytical methods involving cointegration and error correction model techniques are used on annual data from 1970 to 2012. Results show that minimum wage has positive relationship with unemployment and negative relationship with aggregate employment. Similarly, union density has positive effect on unemployment. The effects of minimum wage and union density on employment and wages across sectors are mixed. It is argued that design and implementation of institutional and regulatory framework need caution, as they may yield unintended results.

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Notes

  1. See Folawewo (2009) for a comprehensive review of the various minimum wage legislations Nigeria.

  2. There are several trade unions in Nigeria, nearly every profession has one form of trade union or the other; however, all trade associations and labour unions are either members of NLC or TUC.

  3. Sanchez-Puerta (2010) presented her review of literature under four sub-headings: (1) effects of employment protection legislation on labour market outcomes, (2) shifting from job to worker protection, (3) effects of active labour market policies on labour market outcomes, and (4) causes and consequences of formality and informality in the labour market.

  4. Fleetwood (2008) called this approach ‘a socio-economic approach’. He stated that it consists in the work of heterodox economists such as economic-sociologists, evolutionary economists, feminists, (old) institutionalists, marxists, post-Keynesians, regulationists, and segmented labour market theorists, as well as those who would not describe themselves as ‘economists’, yet who write on labour markets, coming from disciplines like: industrial or employment relations, labour law, human resource management, education research, organisational and management theory, sociology of work and employment, state theory, urban geography and so on.

  5. Both the UD and MW index are calculated for aggregate and sectoral levels.

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Authors and Affiliations

  1. Department of Economics, Faculty of the Social Sciences, University of Ibadan, Ibadan, Nigeria

    Abiodun O. Folawewo

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  1. Abiodun O. Folawewo
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Correspondence to Abiodun O. Folawewo.

Appendix

Appendix

See Table 6.

Table 6 Structural break unit root test results
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Folawewo, A.O. Institutions, regulatory framework and labour market outcomes in Nigeria. J. Soc. Econ. Dev. 18, 67–84 (2016). https://doi.org/10.1007/s40847-016-0028-5

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