Real Exchange Rate Volatility and Sectoral Employment in Nigeria

Abstract

This study investigated the effects of real exchange rate movements on sectoral employment in Nigeria between 1976 and 2016. The sectors of interest were the agricultural sector, manufacturing sector and the service sector. Error correction model (ECM) was used to investigate the objective of the study via two channels of export orientation channel and imported input channel. The empirical analysis results show that the manufacturing sector feel the greatest effect of exchange rate movement than the other two sectors. Considering the sector’s adjustment rate to employment disequilibrium, this shows that manufacturing sector’s employment adjust faster (45 per cent per year) than other two sectors followed by agricultural sector. Accordingly, this investigation recommends that manufacturing sector ought to be all around created and legitimate administration of naira ought to be sought after as an instrument to improve the Unemployment circumstance in Nigeria.