Investigation of the Effect of Growth in Service, Industrial and Agricultural Sectors, on Unemployment in Iran

In recent years unemployment is a serious challenge for Iran’s economy. According to international studies, growth in service sector can reduce unemployment while agricultural and industrial sectors, due to the mechanization and use of high technology, have greater need for capital. In addition, service sector has basic role on facilitating the growth of other sectors. The purpose of this article is to investigate the effect of growth in service, industrial and agricultural sectors on unemployment in Iran.

We used time series statistics of mentioned variables for years 1971 up to 2017. In order to study the short-run and long-run relationship of the variables, Co-integration approach and ARDL were used.

The results show that growth of industrial sector increases unemployment in the short-run, and has no significant effect in the long-run. Also, growth of agricultural sector increases unemployment in the long-run, and has a positive and meaningless coefficient in the short-run. However the growth of service sector significantly reduces unemployment both in the long-run and in the short-run.

growth of service sector reduces unemployment in long-run and short-run, while growth of agricultural and industrial sectors had no significant effect on unemployment. Also inflation unlike the short-run Phillips curve, increases unemployment in long-run.