Analysis of the Challenges of Fiscal Federalism and Revenue Allocation in Nigeria.
Macroeconomics of Minimum Wage
Draft: Do not quote
MACROECONOMIC EFFECTS OF MINIMUM WAGE IN NIGERIA: A GENERAL EQUILIBRIUM ANALYSIS
Abiodun O. Folawewo*
Abstract This paper examines the macroeconomic effects of minimum wage (MW) policy in Nigeria using a static computable general equilibrium. Data for the study is drawn from year 2005 National Account of the country. The data is used to construct a 22 x 22 social accounting matrix (SAM) for the economy. The calibration exercise shows that the model’s parameters are able to replicate the baseline data with acceptable precision. Simulation results show that a rise in MW would lead to increased productivity in all economic sectors. The impact of MW increase on employment is mixed; while it leads to marginal rise of employment in agricultural sector, there is a marginal fall in services sector’s employment, and no significant effect in manufacturing and mining and oil sectors. In terms of price effect, an increase in MW would lead to a significant rise in general price level. A rise in MW has positive effects on household income and consumption, as well as on government balances. JEL Code: C680; E640; J380
Prepared for presentation at the CSEA Conference 2007: Economic Development in Africa, Oxford, 19 - 20 March 2007
* Abiodun O. Folawewo, PhD, Lecturer, Department of Economics, The University of the West Indies, Mona, Kingston 7, Jamaica. Tel: +1 (876) 512-3011; Fax: +1 (876) 977-1483. Email: afolawewo2001@yahoo.com, abiodun.folawewo@uwimona.edu.jm.
Macroeconomics of Minimum Wage
Draft: Do not quote
Macroeconomic Effects of Minimum Wage in Nigeria: A General Equilibrium Analysis
Introduction Income policy is usually used as a principal component of welfare boosting and poverty reduction macroeconomic policy framework in Nigeria. Minimum wage (hereafter MW) legislation is a major income policy readily employed in this regard. Although MW policy has both negative and positive effects on the overall economy,
Draft: Do not quote
MACROECONOMIC EFFECTS OF MINIMUM WAGE IN NIGERIA: A GENERAL EQUILIBRIUM ANALYSIS
Abiodun O. Folawewo*
Abstract This paper examines the macroeconomic effects of minimum wage (MW) policy in Nigeria using a static computable general equilibrium. Data for the study is drawn from year 2005 National Account of the country. The data is used to construct a 22 x 22 social accounting matrix (SAM) for the economy. The calibration exercise shows that the model’s parameters are able to replicate the baseline data with acceptable precision. Simulation results show that a rise in MW would lead to increased productivity in all economic sectors. The impact of MW increase on employment is mixed; while it leads to marginal rise of employment in agricultural sector, there is a marginal fall in services sector’s employment, and no significant effect in manufacturing and mining and oil sectors. In terms of price effect, an increase in MW would lead to a significant rise in general price level. A rise in MW has positive effects on household income and consumption, as well as on government balances. JEL Code: C680; E640; J380
Prepared for presentation at the CSEA Conference 2007: Economic Development in Africa, Oxford, 19 - 20 March 2007
* Abiodun O. Folawewo, PhD, Lecturer, Department of Economics, The University of the West Indies, Mona, Kingston 7, Jamaica. Tel: +1 (876) 512-3011; Fax: +1 (876) 977-1483. Email: afolawewo2001@yahoo.com, abiodun.folawewo@uwimona.edu.jm.
Macroeconomics of Minimum Wage
Draft: Do not quote
Macroeconomic Effects of Minimum Wage in Nigeria: A General Equilibrium Analysis
Introduction Income policy is usually used as a principal component of welfare boosting and poverty reduction macroeconomic policy framework in Nigeria. Minimum wage (hereafter MW) legislation is a major income policy readily employed in this regard. Although MW policy has both negative and positive effects on the overall economy,