Regional disparities and the role of education in income determination and distribution: The empirical evidence from Nigeria

This study examined the sources of regional income determination and inequality in Nigeria with particular attention given to the role of educational distribution (inequality). The motivation of the study was twofold. First, there is a growing concern about the country’s economic growth not being evenly distributed.
Differences exist in the economic indicators between the Southern (coastal) and Northern (inland) regions, and such a disparity could be a hindrance to national development. Second, a review of previous studies in the regional economic literature suggests that the sources of regional disparity within the country have not been comprehensively investigated. Realizing that the development of human capital
through education is critical to income determination and perhaps in reducing economic disparities across the regions, this study analysed, using the spatial econometric method, whether the regional variation in educational distribution is one of the main factors for this disparity to prevail. Data from the World Bank ‘Living Standards Measurement Survey’ (LSMS, 2013) on Nigeria were used. The study
concludes that the leading determinants of regional income level and disparity in Nigeria include not only different levels of educational attainment but also different levels of regional educational inequality. In the Nigerian labour markets, as it is in other developing countries, education premium increases with the level of education. There is a significant variation across regions in the private returns to education in Nigeria, and social returns to education are the highest on secondary education in Nigeria. The findings of this research underscore the point that balanced regional development efforts in a heterogeneous country cannot effectively and efficiently yield the desired result with a 'one size fits all' strategy. The policies should, therefore, take into account regional peculiarities and be directed towards reducing
educational inequality both within and between regions in the country