The Asymmetry Effect of Real Wages on the Industrial Employment in Iran (NARDL Approach)

The study of the asymmetric effects of real wages on the employment rate as one of the performance variables of the industrial sector in the theoretical and experimental literature of industrial economics in recent years has been considered by economists in this scope. Therefore, in this paper, by using of nonlinear NARDL approach, the asymmetric effects of real wages on the employment rate of the industrial sector in Iran during the period 1986-2019 have been examined. The empirical results of model estimation indicate that the effect of real wages is asymmetric on the employment of Iran's industrial sector in the short and long term. On the other hand, increasing the real wage of the industrial sector in the long run has a negative impact and decreasing it has a positive and significant effect on the employment rate of this sector and the error correction coefficient also indicates the speed, above the adjustment of short-term error towards equilibrium and long-term value. The value added variable of the industrial sector and economic sanctions also have a positive, negative and significant effect on the employment of the industrial sector in the long run, respectively. Based on the findings of this study, it is suggested that economic policy makers and the industrial sector increase employment through increasing production capacity. Furthermore, controlling the inflation rate can reduce the employment costs of employers and producers in the industrial sector and help increase labor demand and employment.