Publication Details
Abstract
This study empirically examined the effect of income inequality on economic growth in Nigeria from 1990 to 2023. Specifically, the study analysed the effect of the three components of income inequality (Gini coefficient, poverty index and unemployment rate) on the measure of economic growth (Gross Domestic Product). In order to achieve the objectives of study, relevant annual time series data were used and sourced from Central Bank of Nigeria (CBN) statistical bulletin and World Bank Development indicators. The data analysis techniques adopted are: Augmented Dickey-Fuller (ADF) statistic of unit root test, bounds cointegration test and Autoregressive Distributed Lag Model (ARDL) approach. The results of the study showed that Gini coefficient has a negative and significant effect on Gross Domestic Product in Nigeria, poverty index has a negative and significant effect on Gross Domestic Product in Nigeria while unemployment rate has a negative and non-significant effect on Gross Domestic Product in Nigeria. Based on the findings, the study concluded that income inequality plays a significant role in promoting economic growth in Nigeria. The study recommended that government should prioritize inclusive economic policies that directly target poverty reduction, such as expanding access to affordable housing, healthcare, and education. Reducing the poverty index through targeted welfare programs and conditional cash transfers will enhance human capital development and stimulate broad-based economic growth.