The Impacts of Health and Education Components of Human Resources Development On Poverty Level in Nigeria, 1980-2013.
The Impacts of Health and Education Components of Human Resources Development On Poverty Level in Nigeria, 1980-2013.
The Impacts of Health and Education Components of Human Resources Development On Poverty Level in Nigeria, 1980-2013.
e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 6, Issue 6. Ver. III (Nov. - Dec. 2015), PP 33-38
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Abstract: An investigation of the effects of health and education components of human resources development
on poverty level in Nigeria was carried out in this paper by employing cointegration test and VECM, using the
data of annual time series for the period 1980-2013. The findings reveal the existence of 8 cointegrating vectors
which show a long-rum relationship among the variables. The VEC result on health component shows that the
variables (HEXP, LR, and FR) have no significant impact on poverty level in Nigeria. The VEC result on
education component shows that the variables (EEXP, PER, and SER) have no significant effect on poverty level
in Nigeria. In contrast, only the TER that is statistically significant with t-statistic and p-value -2.142393 and
0.0421 respectively. The results suggest that level of poverty can be reduced through increases in health
programmes and urgent attention to the education system of the country. Thus, if the objective of a policy is to
reduce poverty level in Nigeria priority should be given to health-care system and welfare packages that will
positively impact on the health of the citizens. Also, the education system should be re-organized to provide
functional education and enrolment rate encouraged to serve the poverty reduction objective. This paper finds
support to health-education-poverty reduction link.
Keywords: cointegration, education component, health component, poverty reduction, VECM.
I.
1.1
Introduction
Human resources development is seen as the process of increasing the knowledge, skills and capabilities of
people. This implies empowerment of people to growth and development of the nation and the society at large.
Studies have identified five major means of developing human resources which include-formal education,
training, extension services, health services and migration (i.e. visits or travels) [1], [2], and [3]. An earlier
study by [4] points that:
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The Impacts Of Health And Education Components Of Human Resources Development On Poverty
It is against this backdrop that this paper aims to find out the structural relationship between human
resources development and poverty level in Nigeria. The outcome will be important to policy makers in
analyzing the structure and transmission mechanism of both health and education indicators to poverty and
determine the best policy mix to achieve poverty reduction objective in the country.
This paper is organized into five sections: section one is the introductory background of the study,
section two talks about the theoretical framework and literature review, section three gives information on the
research methodology, while section four deals with empirical results and discussion and finally section five
covers the summary of findings, policy implications and policy recommendations.
1.2
Human capital theory is premise on the notion that an increase in the persons stock of knowledge and
health raises his or her productivity in both market and non-market activities. The theory emphasizes how
education increases the productivity and efficiency of workers by increasing the level of their cognitive stock.
The provision of education is seen as a productive investment in human capital. Human capital development
presupposes investments, activities and processes that produce technical education knowledge, skill, health or
values that are embodied in people. It implies building on appropriate balance and critical mass of human
resource base and providing an enabling environment for all individuals to be fully engaged and contribute to
goals of an organization or a nation. Any effort to increase human knowledge, enhance skills, health, and
productivity and stimulate resourcefulness of individuals is an effort on human capital development [9] and [10]
notes that human capital consists of inherited and acquired abilities of labour, with education being the primary
source of acquiring these abilities. Studies such as [11] and [12], identified effective investment in human
capital and human resources development as critical components of long-run economic growth and improved
productivity.
1.3
Empirical literature
III.
3.1
Data
The data used for this study are time series covering 1980-2013 periods and were obtained from the
Bulletin of Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) of various issues.
DOI: 10.9790/5933-06633338
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The Impacts Of Health And Education Components Of Human Resources Development On Poverty
3.2
Method of Analysis
This paper made use of econometric procedure in estimating the relationship between the variables.
The Vector Error Correction Mechanism (VECM) was employed in obtaining the coefficients of the equation.
The Augment Dickey-Fuller (ADF) and Phillips-Perron (PP) tests were used to test the stationary of the
variables. Equally, Johanson co-integration procedure was used to test the existence of long-run equilibrium
(stationary) relationship among the variables. This is necessary because the existence of co-integration of the
variables will lead us to employ VECM to capture and correct the short-run dynamics in the time services. In
demonstrating the application of VECM, the multiple linear regression analysis was used where the poverty
index, life expectancy rate, fertility rate, ratio of health expenditure to GDP, primary school enrolment rate,
secondary school enrolment rate, tertiary school enrolment rate and ratio of education expenditure to GDP were
the relevant variables. The poverty index was used as the dependent variable while others were used as
independent variables.
3.3
Model Specification
This paper employed a multiple linear regression function of the form:
LR
HEXP
PER
SER
TER
EEXP
ADF (intercept
and Trend)
-5.554150
_________
-9.183670
__________
PP (intercept and
Trend)
_________
-5.554150
_________
-8.761026
1 % level
5%
10 %
-3.653730 3.653730
-3.661661
-3.661661
-2.957110
-2.957110
-2.960411
-2.960411
-2.617434
-2.617432
-2.619160
-2.619160
Order of
integration
1 (1)
1 (1)
1 (2
1 (2))
-3.564308
__________
-8.446214
__________
-8.112114
_________
-4.902747
_________
-5.790630
__________
-8.140236
__________
__________
-7.649353
__________
-9.459204
__________
-5.297566
__________
-4.902747
__________
-5.794101
__________
-7.224702
-3.661661
-3.661661
-3.653730
-3.653730
-3.689194
-3.653730
-3.653730
-3.653730
-3.653730
-3.653730
-3.646342
-3.646342
-2.960411
-2.960411
-2.957110
-2.957110
-2.971853
-2.957110
-2.957110
-2.957110
-2.957110
-2.957110
-2.954021
-2.954021
-2.619160
-2.619160
-2.617434
-2.617434
-2.625121
-2.617434
-2.617434
-2.617434
-2.617434
-2.617434
-2.615817
-2.615817
1 (0)
1 (2)
1 (1)
1 (1)
1 (1)
1 (1)
1 (1)
1 (1)
1 (1)
1 (1)
1 (0)
1 (0)
DOI: 10.9790/5933-06633338
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The Impacts Of Health And Education Components Of Human Resources Development On Poverty
Note: Mackinnon (1996) one sided P-value and critical value for rejection of hypothesis of unit root were
applied. Source: Authors estimation using E-views 7.0.
The above table (Table 1) reveals that EEXP is stationary at levels while PI, HEXP, PER, SER and TER are
stationary at first difference. Only FR is stationary at second difference while LR is stationary at levels in ADF
at 5% and 10% levels of significance and stationary at second difference in PP at 1%, 5% and 10% levels of
significance. On these bases, the null hypothesis of non-stationary of the time series is rejected we conclude that
the series are stationary.
Eigen Value
0.933127
0.873081
0.793710
0.679443
0.504312
0.387955
0.319373
0.316163
Trace
Statistic
302.1717
215.6131
149.5585
99.04741
62.64118
40.18329
24.47288
12.16116
Prob.**
159.5297
125.6154
95.75366
69.81889
47.85613
29.79707
15.49471
3.841466
0.0000
0.0000
0.0000
0.0001
0.0011
0.0023
0.0017
0.0005
Trace test indicates 8 cointegrating eqn (s) at the 0.05 level; *denotes rejection of the hypothesis at the 0.05
level; **Mackinnon-Haug-Michelis (1999) P-values.
Source: Authors Estimation using E-views 7.0.
Table 2 shows the result of the cointegration test. The trace statistic indicates Eight (8) cointegrating equations
at the five percent (5%) level of significance. It shows existence of long-run relationship among all the variables
tested. The result in the Table 2 was obtained after the sample was adjusted from 1980 to 1982-2013, i.e by
including 32 observations. Linear deterministic trend assumption and lags interval (in first differences) 1 to 1 in
the series were made.
Coefficient
-0.594161
Std. Error
0.234033
t-statistic
-2.538794
P-value
0.0175
D(P1(-1)) = C(2)
0.192913
0.218480
0.882978
0.3853
D(LR(-1)) = C(3)
2.574259
1.921056
1.340023
0.1918
D(FR(-1)) = C(4)
27.08952
19.30076
1.403547
0.1723
D(HEXP(-1))=C(5)
3.608051
1.969103
1.832332
0.0784
0.694616
0.561199
1.237735
0.2269
= C(6)
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The Impacts Of Health And Education Components Of Human Resources Development On Poverty
shows that 34% of the total variations in the dependent variable are accounted for by the variations in the
explanatory variables while 66% of the total variations in the poverty level are attributable to the influence of
other factors not included in the regression equation.
Coefficient
Std. Error
t-statistic
P-value
Cointeq1=C(1)
0.051920
0.047822
1.085691
0.2880
D(PI(-1))=C(2)
-0.102616
0.195058
-0.526078
0.6035
D(EEXP(-1))=C(3)
-0.288963
0.582524
-0.496053
0.6242
D(PER(-1)) =C (4)
-0.146097
0.092535
-1.578834
0.1269
D (SER(-1))=C (5)
0.096026
0.067065
1.431840
0.1646
D(TER(-1))=C(6)
-0.554104
0.258638
-2.142393
0.0421
C =C(7)
0.427916
0.278734
1.535215
0.1373
R
=0.175028, F-statistic = 0.884010, prob (F-statistic) =0.521034, DW= 1.790435. Source: Authors
Estimation using E- view 7.0.
From the results in Table 4 above, the t-statistic for EEXP, PER, and SER, are -0.496053,-1.578834 and
1.431840 respectively while their p-values are 0.6242,0.1269 and 0.1646 respectively and the chosen level of
significance is 0.05 that is less than the p- values, it shows that the variables have no significant impact on
poverty level in Nigeria. In contrast, the t-statistic and p-value for tertiary school enrolment rate (TER) are 2.142393 and 0.0421 respectively. This shows that the variable (i.e. tertiary school enrolment rate (TER) has
significant impact on poverty index in Nigeria. From Table 4, the coefficient of ECM (-1) is 0.051920 that does
not satisfy the negativity condition and its p-value is 0.2880 that is higher than 0.05 level of significance and
does not satisfy the second condition either. This implies that the educational system in Nigeria, taking ratio of
education expenditure, primary school enrolment, secondary school enrolment and tertiary school enrolment
into consideration do not significantly impact on poverty reduction in Nigeria. By extension, this result suggests
non functionality of the education system. That is the system does not provide the functional education needed
to help reduce poverty. The coefficient indicates that the speed of adjustment between the short-run dynamics
and the long-run equilibrium is 5.2%. This is statistically very low, the computed coefficient of determination
(R2) = 0.175028. It shows that only 17.5% of the total variations in the dependent variable are accounted for by
the variation in the explanatory variables while 82.5% of the total variation in the poverty level is attributable to
the influence of other factors.
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The Impacts Of Health And Education Components Of Human Resources Development On Poverty
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