IMPACT OF MINIMUM WAGE ON THE NIGERIA LABOUR MARKET

ABSTRACT : The primary goal of minimum wage laws is to ensure that workers earn a wage that meets basic living standards, thereby serving as a safeguard against poverty. This study examined the impact of the minimum wage on labor market outcomes in Nigeria, with a focus on the informal economy, income distribution, and labor productivity. The analysis employed the Autoregressive Distributed Lag (ARDL) model using annual time-series data spanning 1991-2023, which enabled the estimation of both short-run dynamics and long-run relationships. Findings from the Model used revealed that population growth and inflation significantly reduced informal employment. However, minimum wage and GDP were found to be insignificant in determining informal employment, reflecting the challenges of jobless growth and the limited effectiveness of wage policies within the informal sector. The study concludes that while minimum wage can enhance productivity, its effect on informal employment remains weak. Accordingly, policy efforts should prioritize addressing rapid population growth, strengthening inflation control measures, promoting and facilitating FDI outflow, and reviewing and implementing the minimum wage policy effectively. Furthermore, promoting inclusive and job-creating economic growth alongside enhancing labor market policies and social protection is essential to foster sustainable employment outcomes and build a more resilient Nigerian labor market.

KEY WORDS: Autoregressive Distributed Lag, Labor Market, Minimum Wage, Population Growth, Inflation.