INTERACTING THE EFFECT OF TAXATION AND UNEMPLOYMENT RATE ON NIGERIA'S ECONOMIC PERFORMANCE

Abstract

This study makes a different contribution by investigating the effect of the interaction between taxation and unemployment on Nigeria’s economic performance. Secondary data were collected from the World Bank development indicator, spanning 1989 to 2023. The application of the unit root test eliminated the presence of unit roots that could cause erroneous findings. The applied OLS regression model indicates that taxation has a positive significant influence on Nigeria’s economic performance, whereas unemployment and the interaction effect of taxation and unemployment have a negative significant impact on the country’s economic performance, suggesting that an increase in taxation contributes to the rise in Nigeria’s economic performance, whereas the unemployment and interaction effect hurt the country’s economic performance. Thus, the government should develop a sustainable policy that will drastically combat the menace of unemployment in Nigeria and also create a system that will automatically make tax-payers enjoy the proportional benefits of paying tax while ensuring that tax revenue is holistically used for infrastructural development that will enhance Nigeria’s economic performance