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ABSTRACT
This study evaluates the role of minimum wage policies and exploring its influence on employment dynamics and poverty alleviation in Nigeria using economic and econometric tools. The study checks for unit root using Augmented Dickey-Fuller (ADF) to check if the variables are stationary or non-stationary. Also, to check that long run relationship exists, the study used the Bounds test for cointegration. This shows the existence of long-run relationship among the variables employed in the study. An error correction model was determined to show the relationship between the dependent and independent variables. The F-statistic test was carried out to check for the significance of the model and was found to be statistically significant. The Breusch-Godfrey test for serial autocorrelation was carried out and the result showed that there is no serial autocorrelation among residuals. The Heteroskedasticity test was also carried out in this study and it was determined that the model is homoskedastic. The Ramsey test for specification bias was employed in this study and the result indicated that the model is well specified.
The sign and statistical significance of the speed of adjustment represented by the coefficient of the ECM and seen as the converging force between the long and short run models were appropriate and in conformity with a priori and statistical expectations in all the models of the various statistical and econometric measures as well as empirical results were quite revealing indicating both a positive and negative relationship between variables used to capture minimum wage and its influence on employment dynamics and poverty alleviation in Nigeria. Following a detailed time series analysis, the study conclusively reveals the relationship between minimum wage, employment dynamics, and poverty alleviation is nuanced. A well-designed and appropriately adjusted minimum wage can be a valuable tool for reducing poverty and income inequality. However, policymakers must carefully consider labour market conditions, regional disparities, and the potential impact on job opportunities when setting and adjusting minimum wage levels. Additionally, complementary policies and social safety nets are essential components of a comprehensive strategy for poverty reduction study.
