Effect of Minimum Wage Legislation on Poverty Levels: Evidence from Nigeria
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The study investigated the implication of minimum wage on the poverty rate in Nigeria. The objective of the study is to examine the potential influence of minimum wage on the poverty level in the country. There is a scarcity of research on this matter, despite its significance in providing recommendations for policy. The central Bank of Nigeria Statistical Bulletin (2018), National Bureau of Statistics (2018) and World Development Indicator, 2016 edition provided annual statistics on minimum wage, inflation, per capita income, unemployment and poverty rate from 1990 to 2018. The study utilized descriptive statistics and ARDL methodologies. The Augmented Dickey-Fuller test was used to determine whether the data set had a unit root (stationary). The result indicated that the series had a combination of I(0) and I(1). The ARDL model was employed to examine the existence of a long-term relationship. The study found that an increase in the minimum wage reduces the prevalence of poverty in the short run but failed to impact significantly on poverty in the long run. The inability of the minimum wage to impact poverty in the long run may be due to inflationary pressure. Taking into cognisance the 2024 Labour Union strikes, among others, the study recommends that the government engage in time to time review of minimum wage and develop an agreed poverty reduction mechanism that can be used by all concerned stakeholders in Nigeria such as Federal, state and local governments and Non- Non-governmental organizations (NGOs) and International Donor Communities.
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