Economic Growth and Demographic Dividend Nexus in Nigeria: A Vector Auto-regressive (VAR) Approach

Abstract

In demography and population economics discourse, the macroeconomic implications of an upsurge in working age population, notably the labour force, on economic growth has been widely studied and the inherent beneficial impact has become known as demographic dividend. However, the exact mechanism linking the dividend to growth remains a perennial question. This motivates the current study to investigate empirically the dividend-growth nexus in the context of Nigerian economy in a multivariate VAR model spanning between the period 1970 and 2017. Specifically, the paper attempted to answer the question: Is the Nigerian Demographic Dividend an Education-triggered Dividend? Innovation Accounting Techniques was applied to assess the dynamic interactions among the variables. The empirical evidence obtained revealed that the innovation in gross enrollment made many contributions to the variation in economic growth relative to innovation in economic support ratio. The magnitude ranges between 20.09 and 27.54 percent. This result, thus, lend credence to the theoretical view of the education-triggered dividend model which ascribes to education twofold roles of helping to lessen fertility and also enhancing productivity but invalidates the conventional dividend paradigm.