ECONOMIC SIZE, UNCERTAINTY, AND INCOME INEQUALITY IN NIGERIA

Abstract

This paper investigates the effect of economic size and uncertainty on income inequality in Nigeria from 1980 to 2020. Using the ARDL methodology, and controlling for structural breaks, we investigate how economic size and uncertainty influence income inequality in Nigeria while controlling for the effects of government expenditure, oil rent, birth rate, and primary school enrollment rates. Results from the analysis shows that the short-run effects of economic size and uncertainty on income inequality is positive and insignificant. The effect in the long-run remains positive and insignificant for economic size, but negative and significant for uncertainty. The effects of other variables like government expenditure and birth rate are negative and statistically significant. The government of Nigeria need to treat the reduction of income inequality as a long-run phenomenon, but endeavour to reduce uncertainties in the short run which exacerbates income inequality.