IMPACT OF INFLATION AND UNEMPLOYMENT ON INCOME INEQUALITY IN NIGERIA

The Nigerian economy has been undergoing the most severe economic crisis of unemployment and inflation ever since the 1980s. Inflation has been staggering well up to double digit rates while unemployment rate has been rising exorbitantly. These twin economic evils have continued to cause considerable hardship for many Nigerian families with low income. This study therefore aims at investigating the relative impact of inflation and unemployment on income inequality in Nigeria for the period 1981 to 2023 making use of annual time series data, collected from CBN statistical bulletin and World Development Index (WDI). The study employs the Auto-Regressive Distributed Lag (ARDL) approach. But the Augmented Dickey Fuller (ADF) unit root test was used to ascertain the order of integration of the variables before the variables were subjected to the ARDL model. As expected it was discovered that inflation and unemployment has a devastating effect on income inequality in Nigeria. The researcher recommends that the Central Bank of Nigeria’s (CBN) continuously pursuit, vigorously and transparently, the policy of inflation targeting, improvement of infrastructure and access to credit to make it possible for more people to do business in Nigeria. Also recommended the need to provide a favourable business environment to attract foreign direct Investment inflow, job creation, and generation of policies towards the growth of small and medium enterprises (SMEs).