Determinants of Income Distribution in the Nigeria Economy: 1977-2005

Abstract

The study carried out an investigation of a number of factors which determine income distribution in Nigeria by making empirical analysis of the relationship between the determinants and income distribution using the cointegration technique. The empirical findings in the study revealed that, Gini Coefficient is very high in Nigeria, indicating a high level of income inequality. Also, employment rate, inflation rate, Gross Domestic Product and social spending were true determinants of income distribution in the Nigerian economy during the period under review (1977-2005). The study also found that, both the growth rate of output and government health expenditure exhibited an inverse relationship with Gini coefficient of income distribution in the Nigerian economy while employment rate, inflation rate and government education expenditure had direct relationship with Gini coefficient of income distribution in the Nigerian economy. Moreso, the findings showed the existence of a long run relationship between income distribution and its determinants in Nigeria. Finally, from the empirical findings in this research work and based on the relationship each determinant exhibited with the Gini coefficient of income distribution in Nigerian economy, a set of policy ecommendations were made such as: government ensuring the formulation and implementation of more pragmatic employment policies in Nigeria, government ensuring proper monitoring of its spending on education and health through appropriate policy measures and policies that bring about more equitable distribution of income and associated income earning opportunities were suggested among others.

Key words: Income distribution; Inegquate; Gini coefficient enploment rate; Nigeria economy