IMPLICATIONS OF PUBLIC DEBT ON JOB CREATION AND ECONOMIC STABILITY IN NIGERIA

Abstract

This study delves into the complex relationship between public debt and job creation in Nigeria,
focusing on how increasing levels of public debt affect employment rates and the broader labour
market. Using time-series analysis, this study examines the dynamic interactions between public debt
(PD) and key employment metrics, including the Employment Rate (ER), Unemployment Rate (UR),
Labor Force Participation Rate (LFPR), and Sectoral Employment Trends (SET). The findings revealed
significant lagged effects, showing that changes in public debt impact these employment indicators in
distinct ways. An increase in public debt from the previous period is associated with a decrease in the
Employment Rate, suggesting potential crowding-out effects on job creation. Conversely, higher public
debt correlates with lower Unemployment Rates and higher Labor Force Participation Rates, reflecting
complex labour market adjustments influenced by fiscal policies. Sectoral Employment Trends also
respond to public debt levels, indicating potential sector-specific impacts. These results highlight the
interactions between public debt dynamics and employment outcomes in Nigeria. Policy implications
underscore the need for prudent debt management strategies to mitigate adverse effects on job creation
while promoting inclusive economic growth. Strengthening fiscal frameworks, enhancing transparency
in debt utilization, and promoting sectoral diversification are critical measures to optimize the
employment impact of public debt. The study aims to provide policymakers with tailored insights and
actionable strategies to balance the benefits of public debt with the need for economic stability and job
creation.