Title: Effect of Public Sector Wage Expenditure on Economic Growth in Nigeria
Authors: Ven. Prof. J. K. J. Onuora. Chinemelum Eunice Nkemjika. Tochi Genervin Ibebuchi, Josephine N. Anyaegbunam
Volume: 9
Issue: 11
Pages: 1-11
Publication Date: 2025/11/28
Abstract:
This study examined the effect of public sector wage expenditure on economic growth in Nigeria, with the specific objective of analyzing the effect of public sector wage payments on both real and nominal GDP from 2000 to 2024. The study adopted an ex-post facto research design, utilizing annual secondary time-series data collected from the Central Bank of Nigeria Statistical Bulletins. The population comprised all years from 2000 to 2024, giving a total sample size of 25 observations. Data were analyzed using the Fully Modified Ordinary Least Squares (FMOLS) method, while stationarity was tested with the Augmented Dickey-Fuller (ADF) test, and Granger causality was applied to examine the direction of influence. Findings reveal that: public sector wage expenditure has a positive and significant effect on real GDP in Nigeria (? = 116.0663, p = 0.000); public sector wage expenditure has a positive and significant effect on nominal GDP in Nigeria (? = 570.9180, p = 0.000). The study concluded that effective management of public sector wages can stimulate economic growth, highlighting the importance of aligning wage policies with fiscal and development objectives. Hence, the Federal Ministry of Finance and the Budget Office of the Federation should ensure that public sector wage payments are timely and efficiently disbursed. By maintaining consistent and predictable wage payments, these agencies can support household consumption and stimulate productive activities in the economy, thereby sustaining growth in real output and enhancing overall economic stability.