Examining the macroeconomic drivers of self-employment in Nigeria

Nigeria’s formal job market has failed to keep up with the country’s growing population, causing a staggering number of citizens to work for themselves out of necessity rather than opportunity. This phenomenon is usually referred to as a survival, entrepreneurship boom. To this end, this study analyzes the impact of economic growth, poverty, the rule of law, and agriculture on self-employment in Nigeria between 1990 and 2023. Autoregressive Distributed Lag (ARDL) and other advanced econometric techniques were used. The findings from the ARDL long run form and bounds test and ARDL error correction regression reveal that (i) Gross domestic product positively influences self-employment in the short and long run, (ii) stringent rule of law consistently reduces self-employment in the long run, (iii) poverty is found to lower self-employment only in the long term, and (iv) agriculture shows no significant long-run effect. The robustness of these results is confirmed through multiple stability and diagnostic tests. These insights underscore the complex drivers of self-employment in Nigeria and provide critical guidance for policymakers seeking to design strategies that foster sustainable self-employment. To promote self-employment in Nigeria, the government could focus on economic growth, moderate regulatory standards, and strengthening poverty-reduction efforts.