Labour Force Participation, Earnings and Inequality in Nigeria

The labour market is a very important source that offers explanation for earnings and income inequality. The structure of the labour market has a significant consequence on employment status and it serves as an important determinant of household income and welfare. Like most labour markets in developing countries, the Nigerian labour market represents one of the major sources of risk through which people fall into poverty. Thus, it is important to identify some of the factors that affect earnings and entry into the labour market. This paper analyses, among other things, the distribution and structure of main job earnings, determinants and income inequality in the Nigerian labour market. The study uses tabular presentations, Gini Coefficienst, Theil’s Entropy Index, Ordinary Least Squares technique, Heckman’s twostage selectivity bias correction procedure, Tobit analytical technique as well as descriptive statistics for analyses. The results show that inequality is more pronounced in paid employment than in selfemployed segment of the Nigerian labour force; it is higher among women involved in paid employment than men in the same employment segment; it is higher among self-employed men than their female counterparts; it is generally higher in the rural areas than in the urban areas; and within group inequality mainly explains income inequality in Nigeria. The labour market in Nigeria presents opportunities for participants to earn incomes and determine their welfare. The government should in line with its reform programmes take necessary and adequate steps to optimally address the various sources of labour market and earnings inequality in Nigeria. This will pave the way for the opportunities in the Nigerian labour market to be optimally utilised by all participants irrespective of gender or location of residence.