The Causes of Unemployment in Iran

International Journal of Applied Business and Economic Research, Vol. 1, No, 1, pp. 21-33, 2003

Posted: 21 Feb 2005

See all articles by Abbas Valadkhani

Abbas Valadkhani

University of Wollongong - School of Economics and Information Systems

Abstract

This paper examines the major causes of Iran's unemployment conundrum using a simultaneous-equation model and annual time series data from 1968 to 2000. It is found that the rate of unemployment responds positively to output gap and increasing economic uncertainty and negatively to the higher growth rates of real investment and inflation, supporting the view that there exists a degree of trade-off between inflation and unemployment. However, since persistent and soaring inflation rates eventually lead to the chronic depreciation of the domestic currency and rising economic instability, it will be irrational to exploit this trade-off to fight against unemployment, particularly in the post-1979 revolution. Iran possesses one of the youngest populations in the world with approximately 40 per cent of its population less than 15 years. It is thus argued that if major tax and constitutional reforms are not undertaken, unemployment will continue to rise, depicting a sombre future for the next working age generation.

Keywords: Unemployment, Iran, Output gap

JEL Classification: E24, J64, O11

Suggested Citation

Valadkhani, Abbas, The Causes of Unemployment in Iran. International Journal of Applied Business and Economic Research, Vol. 1, No, 1, pp. 21-33, 2003, Available at SSRN: https://ssrn.com/abstract=669702

Abbas Valadkhani (Contact Author)

University of Wollongong - School of Economics and Information Systems ( email )

Northfields Avenue
Wollongong, New South Wales 2522
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
2,265
PlumX Metrics