Petroleum and its consequences for prices, employment and wages in Nigeria

Abstract

The availability of oil resources in Nigeria has had a profound impact on the economy, particularly the economy's sectoral structure. Although the oil sector itself never did put pressure on the other sectors directly, since its labour requirements were negligible, the policy response by the authorities towards the oil revenue inflicted adverse effects on the agricultural sector. Exchange rates appreciated both in nominal and real terms, the latter considered to be a spending effect of the oil boom. Consequently, labour costs increased in terms of the exogenously determined agricultural product prices. The oil resource, undoubtedly, contributed to Nigerian agricultural deterioration.