Abstract:

The achievement of full employment is one of the macroeconomic objectives of monetary policy. This is because of the negative effects that unemployment poses on any economy, such as increase in social vices and fall in the standard of living. In Nigeria, the unemployment rate has been persistent over the years and has been on double figures since 2000. The industrial sector has been identified as one of the means to address this issue due to its role in ensuring sustainable growth and development especially for developing countries. However, evidence from the Central Bank of Nigeria Statistical Bulletin reveals that the industrial sector lags behind the agricultural sector and services sector in terms of its contribution to the Gross Domestic Product. The industrial sector contributed 20 percent to Gross Domestic Product (GDP) in the fourth quarter of 2016, whereas agricultural and services sector contributed 26 percent and 54 percent, respectively. In light of this, this paper seeks to ascertain whether the industrial sector development is a veritable tool in addressing the issue of unemployment in the long run for the Nigerian economy through the use of an Auto regressive distributed lag (ARDL) model using annual data from 1985 to 2016. The findings reveal that while an inverse relationship exists between industrial output and unemployment, the result is statistically insignificant which can be linked to the peculiar nature of the Nigerian economy.