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Abstract

Nigeria experienced two severe economic recessions, in 2016 and 2020, that fundamentally disrupted its sectoral employment structure. Despite aggregate GDP growth recovering to 2.9 percent by 2023, real per capita incomes remain under pressure and income inequality persists, raising critical questions about the quality of labour reallocation during the post-recession period. This article investigates whether labour movements across sectors in post-recession Nigeria have been growth-enhancing or inequality-augmenting, deploying the McMillan-Rodrik (2014) shift-share decomposition to disaggregate aggregate labour productivity growth into within-sector and structural change components. Using panel data across 36 Nigerian states from 2015 to 2023 drawn from the National Bureau of Statistics (NBS) Labour Force Survey series, the World Bank Nigeria Economic Monitor, and the ILO Economic Transformation Database, the analysis finds a net negative structural change component of approximately -1.8 percentage points, implying that workers are reallocating toward lower-productivity activities on balance. An Ordinary Least Squares (OLS) regression with state and year fixed effects, supplemented by an Instrumental Variables (IV) approach to address potential endogeneity in informality rates, confirms that sectoral fragmentation, rising informality (92.2 percent of employment by 2023), and the expansion of low-productivity non-tradable services are the principal chanels through which labour reallocation has amplified inequality. Sectoral wage premia analysis reveals a wage ratio of approximately 22.5x between oil and gas and agricultural workers, sustaining highly segmented labour markets. The article concludes that Nigeria's growth recovery represents a case of regressive labour reallocation—GDP growth decoupled from inclusive income gains and argues for targeted industrial policy to expand high-employment-elasticity manufacturing and enhance productivity in the informal sector.