HUMAN CAPITAL DEVELOPMENT AND POVERTY REDUCTION IN NIGERIA: A ROBUST LEAST SQUARE APPROACH

Abstract

The impact of human capital development on poverty reduction is important, given its policy implications especially with respect to the developing countries particularly Nigeria. The paper examined the relationship between elements of human capital development and poverty alleviation in Nigeria, from 1981-2020. In specific terms, the effects of government expenditure on education, government expenditure on health, inequality and unemployment on poverty level, were examined. The paper makes use of time series data from secondary source, on Nigerian economy for the period 1981-2020, obtained primarily from the National Bureau of statistics and Central Bank of Nigeria (CBN,2021) Bulletin. The work used Robust Least Square Techniques, to determine whether the elements of human capital development had any effect on poverty index in Nigeria. The Robust Least Square Technique employed showed that a percentage increase in expenditure on education will reduce poverty by 1%. 1% increase in unemployment approximately gives a 1% increase in poverty. a percentage decrease in inequality, on the average, reduces poverty by 0.64 %. This is indicative that bridging the inequality gap is robust in reducing the level and depth of poverty in Nigeria. The paper therefore concluded that Human capital development has significant impact on poverty reduction in Nigeria. And recommended that government should invest more on education, health, skills acquisition and formulate policies that will reduce unemployment.