The estimation of optimal rate of unemployment (ORU) its comparison with natural rate of unemployment (NAIRU) (with special reference on the third social and economic development plan)

In this paper optimum rate of unemployment has been measured and compared it with the natural rate, using the reliable statistical resources during 1972-2001. Results show that, there is a significant difference between optimum and natural rate of unemployment. The optimum rate is estimated using the quadratic regression of the Loafer curve and the simulation model to confirm regression coefficients. The natural rate is estimated by the George Perry & Gordon researches and comparative expectation models. Our conclusion implies that the difference between the optimum and natural rate is due to the misuse of instrumental variables in the model, where as the difference between the natural rate and present rate of unemployment in Iran is the result of surplus supply of labor and the lack of equilibrium in supply & demand of labor. The estimation of unemployment also is done, considering the third development planning to gain an optimum rate in this paper. The simulation results confirm the induced coefficients and studying the inflation unemployment trade off confirms the existence of Phillips curve in Iran.