Re-examining the Relationship between Changes in Production, Unemployment Rate and Employment Growth in the Iranian Economy

This paper investigates the relationship between the unemployment rate and economic growth (Okan Law) in Iran. Our results show that there is a weak relationship between our variables of interest. Further, over the last two decades, the significant relationship between economic growth and employment growth was lost which was an indicator of an increase in unemployment rate in some years. We also define and estimate the effective unemployment rate to exclude active population from the official unemployment rate. We find that a decrease in the participation rate explains changes in the unemployment rate in comparison with an increase in the economic growth.