The Labor Wedge in Iran

Always، the issues about job-creating and elimination of unemployment، as one of the essentials of each society; was attention by the economists. In addition the unemployment as a economical، sociological، and political destructive phenomenon; is one of the main concerns of all governments in the worlds. The obviation of the phenomenon، as one of the primary tasks of governments، is part of their responsibilities. To deal with unemployment and overcome it، at first the channels that rising unemployment or cause wedge in the job market should be identified. This paper is an attempt to identify shocks that lead to creation wedge in labor market and increasing unemployment in Iran. For this purpose، time series analysis، based on VAR model and cointegration relations is used. Accordingly، the annual data over the period 1344- 1389 were used. The results show that increase in oil revenues، government’s budget deficit، and liquidity cause to creation of wedge in labor market and increase the unemployment. But increment in total capital cause the decrease in unemployment and lead to elimination of the wedge in labor market.