Oil Shock,Household Income And Expenditure:Evidence From Nigeria

This study poses three research questions:What is the effect of 2015 oil shock on household income?Does the effect vary depending on sector of employment and state of residence of households?What is the effect of 2015 oil shock on household food expenditure?To this end,panel data covering 4616 households for the period of 2010,2012 and 2015 are used.Panel fixed effect estimation method is adopted to control for unobserved household heterogeneities.The first regression results show a significant reduction in household income by 8.3%during the shock.It also shows that the effect was felt more by households employed in oil sector and those residing in oil-producing states.More specifically,household employed in oil sector and those residing in oil-producing states earned 6.9%and 17%less respectively.Categorizing households into different income groups show that poor households felt the shock the most.The second regression results show that household food expenditure increased significantly by 11.1%during the shock.The reason is traced to the observed reduction in consumer price index during the shock.