Public Healthcare Expenditure and Labour Productivity Dynamics in Nigeria: Evidence from the ECM–ARDL Model (1986–2025)
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This study investigates the impact of public healthcare spending, life expectancy, labour force participation rate, and real gross domestic product on labour productivity in Nigeria between 1986 and 2025. Based on Wagner's law of growing state activity, the study uses an Error Correction Model (ECM) and the Autoregressive Distributed Lag (ARDL) bounds testing approach to analyze annual data from the World Bank and the Central Bank of Nigeria Statistical Bulletin. While the limits test verifies a long-term cointegrating relationship between the variables (F-statistic = 72.31), unit root tests show a mixed order of integration, I(0) and I(1), supporting the ARDL technique. The findings demonstrate that labour productivity is negatively and statistically insignificantly impacted by public healthcare spending over both the short and long terms. Real gross domestic product has a substantial, positive, and considerable impact on labour productivity, whereas life expectancy and the labour force participation rate have large negative long-term effects. Every year, about 6.8% of short-run disequilibrium is rectified, according to the error correction term (−0.068). The study comes to the conclusion that increasing labour productivity in Nigeria is more dependent on fundamental labour-market reform and steady economic growth than on the amount of money spent on healthcare. It suggests shifting health spending to infrastructure and preventative care, coordinating labour force growth with job creation, and pursuing steady, growth-oriented macroeconomic policy.
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