Review of Existance of Hysteresis Effects on the Iranian Labor Market – The Differentiation Made by Gender, Regions and Number of Youths

In consonance with the principle of Hysteresis theory, the rate of unemployment is per se, non-stationary and the shocks inflicted on the rate of unemployment consist the persistent impact, Sine die. Nonetheless investigation of results for various unit root tests applied to the rates of inflation in the Iranian economy on a quarterly basis, for the study period of 2005-2018, prima facie, indicate that the rates of unemployment for the whole country as well as the urban areas and also based upon the distinction between the males and females, were stationary, in toto, which de facto, stipulated as the absence of existing Hysteresis effect in the Iranian Labour Market in that period. In other words, we can specify that although the economic shocks or the demand insentive policy may be subject to vicissitudes in the rate of unemployment in the short-run, but the impacts of these shocks shall be faded away in the long run and the unemployment rate will return to its equilibrium trend, Ipso facto. Hence, the reduction of unemployment rates, could be feasible Viz-a-Viz, implementation of supply-side policies, besides the improvement of manufacturing structure of the economy. However, we have observed that the unemployment rates in the rural areas and also among the youth groups were non-stationary during the study period, which demonstrate the existence of Hysteresis phenomena in those rates, Sine qua none. In this context, we may postulate that, the concerned rates of unemployment have been raised due to impact of economic shocks and the execution of demand-side policies in which their equilibrium rates have uplifted to the higher levels, Sui generis. Thus the government can change the equilibrium corridor of unemployment rates through imposing the demand – side contrivances, A fortiori.