Output, Unemployment and Okun's Law: Some Evidence from Iranian Provinces

Considering the importance of the Okun’s law in economic policy making، the investigation of the relationship between unemployment and real production at provincial level lead to more efficient economic policies facing unemployment at provincial and national level. The aim of this paper is to estimate the Okun’s coefficients for different Iranian provinces and to determine provincial differences in relationship between GDP and unemployment rate. We estimated the Okun’s coefficients across the provinces using data over the period 2001-2008 and panel data model. The results showed that the Okun’s law holds for 10 provinces and does not hold for 12 provinces and is not robust for other provinces. Moreover، using Wald test، the results also showed that the Okun’s coefficients are statistically different among different provinces.