The Effect of Real Exchange Rate Uncertainty on Employment for Services Sector in Iran

Today in all countries one of the macroeconomic objectives is achieving an acceptable level of labor employment, for that must be regarded capacities and relative advantages for each of the economic sectors. Due to the importance and share of services sector of total employment and exchange rate volatility in recent years in Iran; the purpose of this study is to investigate the effect of real exchange rate uncertainty on employment for services sector in Iran from 1974 to 2012. The ARCH approach used for estimating real exchange rate uncertainty and ARDL model for employment pattern. According to research results, the real exchange rate uncertainty has a positive impact on employment in services sector in Iran; because the effect of real exchange rate uncertainty on employment in agricultural and industry sectors is negative. So the labor departed from agriculture and industry will transfer to services sector. Relationship between added value and per capita capital on employment in this sector is negative, that indicates labor and capital are replaced for each other in which capital replaced for labor in both short and long term. Import of services has positive effect and export of services has negative impact on employment in services sector.