Labor force dynamics and economic performance: A case of Nigeria, India, and China

• Authors: Elizabeth Omolola Oyedepo

Abstracts

EN

Aim/purpose – This study investigated the nexus between labor force dynamics and economic performance in Nigeria, India, and China. Design/methodology/approach – The study used annual time series data spanning from 1991 to 2021 obtained from World Development Indicators (WDI). After the unit root stationarity test, the Autoregressive Distributed Lag Model (ARDL) was used for the analysis. Findings – Findings from the study support a positive short-run relationship between labor force participation and economic growth in all three countries. However, in China, population growth impacts the economy positively in the long run, while life expectancy at birth negatively impacts the economy in the short run. This is because China’s population is aging. In India, employment in the industrial and service sectors positively impacts the economy in the long run. In the short run, life expectancy at birth influences the economy negatively. Furthermore, in Nigeria, the industrial and service sector employment impact the economy negatively in the long run, though there are positive effects in the short run. Research implications – The Indian government needs policy reforms in the areas of education and health to take advantage of the potential of its youthful population. The Nigerian government requires implementing a wide range of education, investment, and employment-generating policies to foster tangible economic growth. These reforms could help both India and Nigeria take advantage of the potential for demographic change. The Chinese government, already having policy reforms in place, is geared towards improved fertility and population growth for economic growth in the near future. These policies, coupled with the study’s findings, could provide a more comprehensive understanding of the implications of demographic change on economic performance. Originality/value contribution – This analysis explored and compared the demographic potentials of two young countries (India and Nigeria) and an aging, wealthy economy (China) from the working class. Policy lessons for the attainment of demographic dividends are borrowed from China.

Keywords

EN

labor force; economic performance; demographic change; population dynamics; ARDL model

• Publisher: Uniwersytet Ekonomiczny w Katowicach
• Journal: Journal of Economics and Management
• Year: 2024
• Volume: 46
• Pages: 143-170

Dates

published

2024

Contributors

author

Elizabeth Omolola Oyedepo

• Augustine University, Lagos, Nigeria

References

• Aaronson, S., Fallick, B., Figura, A., Pingle, J. F., & Wascher, W. L. (2006). The recent decline in the labor force participation rate and its implications for potential labor supply. Brookings Papers on Economic Activity, 1, 69-154. https://www.brookings.edu/wp-content/uploads/2006/03/2006a_bpea_aaronson.pdf
• Abraham, V. (2017). Stagnant employment growth: Last three years may have been the worst. Economic & Political Weekly, 52(38), 13-17. https://www.jstor.org/stable/26697743
• Adeosun, O. T., & Popogbe, O. O. (2021). Population growth and human resource utilization nexus in Nigeria. Journal of Humanities and Applied Social Sciences, 3(4), 281-298. https://doi.org/10.1108/JHASS-06-2020-0088
• Adewole, A. O. (2012). Effect of population on economic development in Nigeria: A quantitative assessment. International Journal of Physical and Social Sciences, 4(2), 47-51. https://www.ijmra.us/project doc/IJPSS_MAY2012/IJMRA-PSS473.pdf
• Ahmed, E. M. (2017). ICT and human capital spillover effects in achieving sustainable East Asian knowledge-based economies. Journal of the Knowledge Economy, 8(3), 1086-1112. http://doi.org/10.1007/s13132-016-0430-4
• Ali, M., Egbetokun, A., & Memon, M. (2018). Human capital, social capabilities and economic growth. Economies, 6(1), 1-18. http://doi.org/10.3390/economies6010002
• Ajakaiye, O., Jerome, A. T., Nabena, D., & Alaba, O. A. (2016). Understanding the relationship between growth and unemployment in Nigeria (Development Policy Research Report). African Growth Initiative at Brookings/Development Policy Research Unit/UNU-WIDER. https://www.brookings.edu/wp-content/uploads/2016/07/growth-employment-nigeria-ajakaiye-jerome-nabena-alaba.pdf
• Anyanwu, U. M., Anyanwu, A. A., & Cieslik, A. (2021). Does abundant natural resources amplify the negative impact of income inequality on economic growth? Resources Policy, 74(1), 102229. https://doi.org/10.1016/j.resourpol.2021.102229
• Barua, R. (2017). Labor, employment and economic growth in India. Indian Growth and Development Review, 10(1), 62-64. https://doi.org/10.1108/IGDR-04-2017-052
• Becker, G. S., Glaeser, E. L., & Murphy, K. M. (1999). Population and economic growth. The American Economic Review, 89(2), 145-149. https://doi.org/10.1257/aer.89.2.145
• Bell, M., Charles-Edwards, E., Ueffing, P., Stillwell, J., Kupiszewski, M.,& Kupiszewska, D. (2015). Internal migration and development: Comparing migration intensities around the world. Population and Development Review, 41(1), 33-35. https://doi.org/10.1111/j.1728-4457.2015.00025.x
• Bloom, D. E., Canning, D., & Malaney, P. N. (1999). Demographic change and economic growth in Asia (Working Paper No. 15). Center for International Development, Harvard University. https://www.hks.harvard.edu/sites/default/files/centers/cid/files/publications/faculty-working-papers/015.pdf
• Bloom, D., Canning, D., & Sevilla, J. (2003). The demographic dividend: A new perspective on the economic consequences of population change. population matters series (Report MR-1274). A Rand Program of Policy-Relevant Research Communication. https://www.rand.org/content/dam/rand/pubs/monograph_reports/2007/MR1274.pdf
• Bloom, D. E., Canning, D., Fink, G., & Finlay, J. (2007). Realizing the demographic dividend: Is Africa any different (Program on the Global Demography of Aging Working Paper No. 23). Harvard University. https://www.hsph.harvard.edu/wpcontent/uploads/sites/1288/2013/10/pgda_wp23_2007.pdf
• Bucci, A., Eraydın, L., & Müller, M. (2019). Dilution effects, population growth and economic growth under human capital accumulation and endogenous technological change. Journal of Macroeconomics, 62, 103050. https://doi.org/10.1016/j.jmacro.2018.08.003
• Chae, H.-C., Koh, C. E., & Park, K. O. (2018). Information technology capability and firm performance: Role of industry. Information and Management, 55(5), 525-546. https://doi.org/10.1016/j.im.2017.10.001
• CIA. (2018). The World Factbook - 2018 Edition. https://www.cia.gov/the-world-factbook/about/cover-gallery/2018-cover/
• Collier, P., & Goderis, B. (2012). Commodity prices and growth: An empirical investigation. European Economic Review, 56(6), 1241-1260. https://doi.org/10.1016/j.euroecorev.2012.04.002
• CRS Reports. (2023). Introduction to U.S Economy: GDP and economic growth. Congressional Research Service informing the legislative debate since 1914. https://crsreports.congress.gov/product/pdf/IF/IF10408
• Cung, N. H., & Hung, D. H. (2020). The impact of the labour force on economic growth in Vietnam. International Business Management, 14(10), 79-90. https://www.researchgate.net/publication/344663702_The_Impact_of_Labor_Force_on_Economic_Growth_in_Vietnam
• Cunningham, L. X. (2010). Managing human resources in SMEs in a transition economy: Evidence from China. The International Journal of Human Resource Management, 21(12), 2120-2141. https://doi.org/10.1080/09585192.2010.509620
• Deliu, A.-M., & Ilea, L. T. (2018). Combined and uneven feminism: Intersectional and post constructivist tendencies. Metacritic Journal for Comparative Studies and Theory, 4(1), 1-5. https://doi.org/10.24193/mjcst.2018.5.01
• Dickey, D. A., & Fuller, W. A. (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica, 49(4), 1057-1072. https://doi.org/10.2307/1912517
• Du, Y., & Yang, C. (2015). Demographic transition and labor market changes: Implications for economic development in China. Journal of Economics Survey, 28(4), 617-635. https://doi.org/10.1111/joes.12072
• Erdogan, M., & Unver, M. (2015). Determinants of foreign direct investments: Dynamic panel data evidence. International Journal of Economics and Finance, 7(5), 82-95. https://doi.org/10.5539/ijef.v7n5p82
• Feinstein, C. H. (1987). Measurement of economic growth. In: The new Palgrave dictionary of economics (pp. 1-4). Palgrave Macmillan. https://doi.org/10.1057/978-1-349-95121-5_1192-1
• Feng, W. (2010). China's population density: The looming crisis (Report). Brookings Press. https://www.brookings.edu/articles/chinas-population-destiny-the-looming-crisis/
• Feyrer, J. (2008). Aggregate evidence on the link between age structure and productivity. Population and Development Review, 34, 78-99. https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=22e56db08abe0468a02070fa726e9d20d60b94e3
• Gatawa, N., Elijah, S., & Mohammed, U. M. (2018). An empirical analysis of the impact of floating exchange rate on balance of payment in Nigeria (1986-2016). Turkish Economic Review, 5(3), 285-307. https://journals.econsciences.com/index.php/TER/article/view/1751
• Ghose, A. K. (2017). Globalization, growth and employment in India. Indian Journal of Human Development, 10(2), 127-156. https://doi.org/10.1177/0973703016663536
• Golley, J. & Tyers, R. (2006). China's growth to 2030: Demographic change and the labour supply constraint (Working Paper No. 467). College of Business and Economics, Australia National University. https://www.hsph.harvard.edu/pgda/wpcontent/uploads/sites/1288/2013/10/PGDA_WP_11.pdf
• Golley, J., & Tyers, R. (2010). Contrasting giants: Demographic change and economic Performance in China and India. Procedia - Social and Behavioural Sciences, 77(1), 353-383. https://doi.org/10.1016/j.sbspro.2013.03.093
• Golley, J., & Wei, Z. (2015). Population dynamics and economic growth in China. China Economic Review, 35, 15-32. https://doi.org/10.1016/j.chieco.2015.05.005
• Hasan, R., Lamba, S., & Gupta, A. S. (2015). Growth, structural change and poverty reduction: Evidence from India. Labor, Employment and Economic Growth in India, 91-126. https://doi.org/10.1017/CBO9781316156476.005
• Hendrixson, A., Ojeda, D., Sasser, J. S., Nadimpally, S., Foley, E. E., & Bhatia, R. (2020). Confronting populationism: Feminist challenges to population control in an era of climate change. Gender, Place and Culture, 27(3), 307-315. https://commons.clarku.edu/faculty_idce/257/
• Hicks, J., Basu, P. K., & Sappey, R. B. (2010). Ageing, labor force participation and education: Comparing the implications for economic growth in China and India. Economic Papers: A Journal of Applied Economics and Policy, 29(3), 333-341. https://doi.org/10.1111/j.1759-3441.2010.00073.x
• ILOSTAT. (2023). Labour Force Statistics (LFS, STLFS, RURBAN databases) (ILOSTAT database description). International Labor Organization. https://ilostat.ilo.org/methods/concepts-and-definitions/description-labour-force-statistics/
• Investopedia Team. (2023). What is economic growth and how is it measured? https://www.investopedia.com/terms/e/economicgrowth.asp
• Johnston, L. (2023, June 6). China's population grew older and richer: Policy lessons for some African countries. The Conversation. Academic Rigour, Journalist Flair. https://theconversation.com/chinas-population-grew-older-and-richer-policy-lessons-for-some-african-countries-205043
• Lewis, W. A. (1954). Economic development with unlimited supplies of labor. The Manchester School, 22(2), 139-191. https://doi.org/10.1111/j.1467-9957.1954.tb00021.x
• Lysonski, S., & Durvasula, S. (2013). Nigeria in transition: Acculturation to global consumer culture. Journal of Consumer Marketing, 30(6), 493-508. https://doi.org/10.1108/JCM-07-2013-0626
• Kale, Y., & Doguwa, S. I. (2015). On the compilation of labor force statistics for Nigeria. CBN Journal of Applied Statistics, 6(1), 183-198. https://dc.cbn.gov.ng/jas/vol6/iss1/9
• McDermott, J., & Hall, V. (2023). Economic performance. Motu Research. https://www.motu.nz/our-research/wellbeing-and-macroeconomics/economic-performance/
• Nauman, E., Van Landingham, M., & Anglewicz, P. (2016). Migration, urbanization and health. In M. White (Eds.), International handbook of migration and population distribution (Vol. 6, pp. 451-463). Springer. https://doi.org/10.1007/978-94-017-7282-2_20
• Okoye, P. V. C., & Ezejiofor, R. A. (2013). The effect of human resources development on organizational productivity. International Journal of Academic Research in Business and Social Sciences, 3(10), 250-268. https://hrmars.com/papers_submitted/295/The_Effect_of_Human_Resources_Development_on_Organizational_Productivity.pdf
• Omolola, O. E., Obayelu, A. E., & Owuru, J. E. (2023). Effects of population dynamics on economic growth among the world most populous countries. African Journal of Economic Review, 11(3), 69-90. https://www.ajol.info/index.php/ajer/issue/view/22391
• Padhi, B., & Motkuri, V. (2021). Labor force and employment growth in India. Economic& Political Weekly, 56(47). https://www.epw.in/journal/2021/47/special-articles/ labour-force-and-employment-growth-india.html
• Pandya, V., & Sisombat, S. (2017). Impacts of foreign direct investment on economic growth: Empirical evidence from Australian economy. International Journal of Economics and Finance, 9(5), 121-131. https://doi.org/10.5539/ijef.v9n5p121
• Peng, X., & Mai, Y. (2008). Population ageing, labour market reform and economic growth in China: A dynamic general equilibrium analysis (General Paper No.G-174). Centre of Policy Studies (CoPS), Monash University. https://www.copsmodels.com/ftp/workpapr/g-174.pdf
• Pesaran, M. H., Shin, Y., & Smith, R. P. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association, 94(446), 621-634. https://doi.org/10.1080/01621459.1999.10474156
• Pesaran, M. H., Shin, Y., & Smith, R. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289-326. https://doi.org/10.1002/jae.616
• Saghir, J., & Santoro, J. (2018). Urbanization in Sub-Saharan Africa. Meeting challenges by bridging stakeholders (Project on Prosperity and Development). Center for Strategic and International Studies. https://csis-website-prod.s3.amazonaws.com/s3fs-public/publication/180411_Saghir_UrbanizationAfrica_Web.pdf
• Soava, G., Mehedintu, A., Sterpu, M., & Raduteanu, M. (2020). Impact of employed labor force, investment, and remittances on economic growth in EU countries. Sustainability, 12(23), 10141. https://doi.org/10.3390/su122310141
• Swain, J. (2018). A hybrid approach to thematic analysis in qualitative research: Using a practical example. In Sage Research Methods Cases (Part 2). Sage Publications. https://doi.org/10.4135/9781526435477
• Rathke, A., & Sarferaz, S. (2014). Malthus and the industrial revolution: Evidence from a time-varying VAR (KOF Working Papers, No. 351) ETH Zurich, KOF Swiss Economic Institute. https://doi.org/10.3929/ethz-a-010073763
• Tan, Y., Liu, X., Sun, H., & Zeng, C. (C.) (2022). Population ageing, labor market rigidity and corporate innovation: Evidence from China. Research Policy, 51(2), 104428. https://doi.org/10.1016/j.respol.2021.104428
• Tartiyus, E. H., Dauda, M. I., & Peter, A. (2015). Impact of population growth on economic growth in Nigeria (1980-2010). IOSR Journal of Humanities and Social Science, 4(5), 115-123. https://www.iosrjournals.org/iosr-jhss/papers/Vol20-issue4/Version-5/U02045115123.pdf
• United Nations. (2015). What are the sustainable development goals? (Report The SGDs in Action). https://www.undp.org/sustainable-development-goals
• United Nations. (2023). India to overtake China as World's most populous country by April, 2023, United Nations projects (Report). Department of Economic and Social Affairs. https://www.un.org/en/desa/india-overtake-china-world-most-populous-country-april-2023-united-nations-projects
• Villamil, A., Wang, X., & Zou, Y. (2018). Growth and development with dual labor markets. The Manchester School, 88(6), 801-826. https://doi.org/10.1111/manc.12341
• World Development Indicators [WDI]. (2021). DataBank. The World Bank. https://databank.worldbank.org/reports.aspx?source=World-Development-Indicators
• Wijaya, A., Kasuma, J., & Darma, D. C. (2021). Labor force and economic growth based on demographic pressures, happiness, and human development: Empirical from Romania. Journal of Eastern European and Central Asian Research (JEECAR), 8(1), 40-50. https://doi.org/10.15549/jeecar.v8i1.571
• World Bank. (2012). World Bank Country Survey 2012. Microdata Library. https://doi.org/10.48529/qnbt-r726
• World Bank. (2021). GDP per capita (current US$) - Nigeria (Data). https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=NG
• World Population Prospects. (2019). Overall total population - World Population Prospects: The 2019 revision [xslx]. Department of Economic and Social Affairs Population Division. https://population.un.org/wpp/
• World Population Review. (2022). India's population growth will come to an end: the number of children has already peaked. Our World in Data. https://ourworldindata.org/indias-population-growth-will-come-to-an-end
• World Population Review. (2023). World population estimated at 8 billion. https://www.census.gov/library/stories/2023/11/world-population-estimated-eight-billion.html
• Worldometer. (2021). China population. https://www.worldometers.info/world-population/china-population/
• Worldometer. (2023). Nigeria's population. https://www.worldometers.info/world-population/nigeria-population/
• Worldometer. (2024). Countries in the world by population (2024). https://www.worldometers.info/world-population/population-by-country/
• Yakubu, M. M., Akanegbu, B. N., & Jelilov, G. (2020). Labor force participation and economic growth in Nigeria. Advances in Management and Applied Economics, 10(1), 1-14. https://www.scienpress.com/Upload/AMAE/Vol 10_1_1.pdf
• Young, A. O. (2018). Impact of labor force on economic growth in Nigeria: An empirical analysis using ARDL bounds testing approach. Journal of Resources, Development and Management, 42(1), 31-46. https://core.ac.uk/download/pdf/234696588.pdf
• Zahonogo, P. (2016). Trade and economic growth in developing countries: Evidence from sub-Saharan Africa. Journal of African Trade, 3(1/2), 41-56. https://doi.org/10.1016/j.joat.2017.02.001

Identifiers

DOI

10.22367/jem.2024.46.06

Biblioteka Nauki

32443882