Impacts of Export Boom on Unemployment in Iran

Foreign trade as one of the tools of globalization leads to international competition and participation of countries in economic activities. In the foreign trade process، uncompetitive activities will lost the ability to survive and will increase the level of unemployment. But if foreign trade increases through the development and boom of exports، it will lead to the creation of job opportunities with higher performance. The aim of this research is to analyze the effects of export booms on the unemployment rate in Iran. To this end، the annual data during the period 1974-2012، ARDL model، bounds test cointegration and Granger causality test were used. The results indicate the existence of cointegration between the variables. The results show that the export booms in both the short run and long run have a negative and significant effect on unemployment rate. The error correction term shows in each period 95 percent of disequilibrium will adjust along the long run equilibrium path. The results of conditional Granger causality test show that there is no short-run causality between variables. However، the long-run causality relationship from terms of trade، capital accumulation in tradable sector، capital accumulation in non-tradable sector، labor supply، and inflation to unemployment rate is accepted at the 1% level.