POVERTY-GROWTH-INEQUALITY TRIANGLE: EMPIRICAL EVIDENCE FROM NIGERIA

Abstract

Purpose: Eradicating poverty is critical to achieving sustainable development. This study appraised the relationship between poverty, economic growth and income inequality in Nigeria and the interaction effect of growth and income inequality on Nigeria’s poverty level. Methodology/approach: The study applied Auto-Regressive Distributed Lag (ARDL) model on annual data between 1980 and 2018 Findings: The study established that per-capita economic growth has a positive but insignificant relationship with poverty in the long run. The result also showed that inequality had a positive relationship with poverty, while the interaction of growth and inequality had a negative relationship with poverty. The Toda-Yamamoto test of causality reveals a bidirectional connection between economic growth and poverty, a unidirectional relationship from inequality to poverty, and a bidirectional relationship between growth-inequality interaction and poverty Originality/value: The study contributes to the literature by examining the PGIT hypothesis, specifically in Nigeria. In contrast to earlier inquiries, this study investigates the interaction effect of growth and inequality on poverty. We also incorporate social development indicators into our empirical PGIT model to aid in the formulation of poverty-eradication programs in Nigeria.