Document Type : Research Paper

Authors

• Mehdi Razavi ¹
• Rassam Moshrefi ²

¹ Assosiate Professor, Faculty of Economics, Shahid Beheshti University

² Ph.D. Student, Shahid Beheshti University

Abstract

Unemployment of factors of production leads to lost opportunity costs, which undermines economic growth. On the other hand, labor employment, among other factors of production, can have significant economic, cultural, political as well as social impacts.
   During the first two decades after revolution, Iran experienced high population growth rate. Jobs were not created in proportion to increased population growth. As such, jobs were scarce, and high unemployment rate were conducive to bring about social and economic problems. To remedy these problems, policy makers are constantly seeking to understand and find practical solutions for unemployment in Iran.
     This article provides a dynamic analysis of labor employment behavior in Iran. In this context, a system methodology has been applied, and labor behavior in Iran is simulated. The final result of utilizing Okun’s law in Iran shows that any 2.5 percent increase in GDP, more than its potential growth rate, will lead to 2.8 percent decrease in unemployment rate.

Keywords

• Employment
• Okun’s Law
• System Dynamic Approach
• Population Cohort Model
• Simulation
• Macro Economic Model