The Effect of Productivity and Unemployment Rate on Wages in the Economy of Iran from 1971 to 2016: The ARDL Approach
Subject Areas : Business Managementsamad karrari 1 , Mustafa Ersungur 2
1 - Ph.D. Student, Department of Economics, Ataturk University, Erzurum, Turkey
2 - Assistant professor, Department of Economics, Ataturk University, Erzurum, Turkey
Keywords: Productivity, ARDL Model, Wage, Unemployment,
Abstract :
The study of the relationship between wage and macro variables of productivity and unemployment, as the link in employment economy, is of particular importance in the economy of Iran. The present study was conducted with the aim of offering a dynamic pattern for examining the effects of productivity, unemployment, training, and inflation on wage rate between 1971 and 2016. To this end, the ARDL Dynamic Model, along with short-term and long-term methods and error correction model, was employed. The results of estimating the research model indicated both short-term and long-term relationships among the research variables. Moreover, inflation rate, productivity and training were found to be positively and significantly correlated in such a way that an increase in training and productivity was found to promote a parallel raise the work force rage. However, unemployment was found to have a negative effect on the rate of workforce wage. Besides, the obtained results of the error correction model used to analyze short-term and long-term relationship indicated an error correction coefficient of-0.30. In addition, the current difference of wage rate in the short run was found to be significantly affected by the current difference between productivity of the workforce and the inflation rate but not by the current difference of training. Finally, the current difference of wage rate was found to be negatively and significantly affected in the short run by the current difference of unemployment rate.
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Ahmed, M. U., Muzib, M., & Roy, A.(2013). Price-Wage Spiral in Bangladesh: Evidence from ARDL Bound Testing Approach. International Journal of Applied Economics,10(2),77-103.
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Baseri, B., & Jahangard, E. (2007). Analysis of the Capacity of Agricultural Employment in Iran. Agricultural Economics and Development, 15(59), 119-146, (In Persian).
Bean C. R., & Pissarides C., (1993). Unemployment Consumption and Growth. European Economic Review, 37, 837-859.
Blanchard, O. J. (1986). The Wage Price Spiral. The Quarterly Journal of Economics, 101(3), 543-565.
Bräuninger, M., & Pannenberg, M. (2002). Unemployment and Productivity Growth: An Empirical Analysis with in Augmented Solow Model. Economic Modelling, 19(1), 105-120.
Daveri, F., & Tabellini, G. (2000). Unemployment, Growth and Taxation in Industrial Countries. Economic Policy, 15(30), 48-104.
Peneva, E. V., & Jeremy, B. R. (2015). The Passthrough of Labor Costs to Price Inflation. Finance and Economics Discussion Series. Washington: Board of Governors of the Federal Reserve System.
Iran Newspaper.(2010).About the Definition of Employment,(In Persian).
Isazadeh, S., & Mehranfar, J. (2013). The Study of the Effect of International Migration on the Rate of Employment and Wage: The Case of the Economy of Iran, 48(2), (In Persian).
Kerbasi, A. R., Esnaesheri, H., & Agel, H.(2008). Forcasting Employment in Agriculture Section in Iran. Journal of Economic and Agricultural Development, 22(2), 31-43, (In Persian).
Khachatryan, A., Grigorian, M. D. A., & Sargsyan, G. (2004). Exchange Rate, Money, and Wages: What is Driving Prices in Armenia?. International Monetary Fund.
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Mehrgan, N., & Rezayi, R. A. (2009). Does Minimal Wage Increase Inflation?. The Journal of Economic Research, 11, (In Persian).
Mohajerani, A. A. (2005). Unemployment: Reasons, Dimensions, and its Fluctuations in Iran. The Periodical of Economic and Political Information, 219 & 220, 4-8, (In Persian).
Moteveseli, M. (2006). The Functioning of the Market Economy in Solving Unemployment in Iran. Journal of Economic Research, (73),107-132, (In Persian).
Musayi, M., & Garshasbi Fakhr, S. (2010). The Study of the Relationship between Unemployment and Drug Smuggling in Iran. The Periodical of Social Issues of Iran, 1(2), 145-168, (In Persian).
Nasrollah Nia, M., Maddahi, M. E., & Rahmanizadeh, F. (2014). The Study of Productivity Level in Iranian Economic Development and Some Members of Asian Productivity Organization. The Scientific Research Periodical of Financial Knowledge for Analysis of the Bonds, 23, (In Persian).
Ning, X. (2004). Unemployment and Productivity Growth: An Empirical Analysis of Causality, Phd Thesis.
Oscar Vargas, F. (1991). The Social Science and the Problems of Youth Unemployment in the World, United Nations, Educational, Scientific and Cultural Organisations. Youth National Organizatio, 1, 134-145.
Presidential Report. (2007). The Ministry of Work and Social Affairs in the Ninth Government: The Approaches and Achievements with a Focus on Entrepreneurship, 1(2), 145-168, (In Persian).
Rahmani T., Behpour S., & Ostadzad, A. H. (2013). An Empirical Examination of the Relationship between Productivity and Unemployment:Simultaneous Equations Approach. Quarterly Journal of Economic Research and Policies, 21(67), 153-170, (In Persian).
Sam Aram, E. A.(2003). The Role of Social Factors in Unemployment among the Youth, Work and Society, 51, 34-38, (In Persian).
Seidayi, S. E., Bahari, I., & Rayi, A.(2011). The Study of the State of Employment and Unemployment in Iran between 1985-2010. Yas Strategy Periodical, 25, 216-247, (In Persian).
Yusefi, A., & Akbari, H.(2011). A Sociological Analysis of Identification and Determining Priorities in the Social Affairs of Iran. The Periodical of Social Affairs in Iran, 2(1), 195-223, (In Persian).
_||_Agenor, P. R., & Hoffmaister, A. W. (1997). Money, Wages and Inflation in Middle-Income Developing Countries. International Monetary Fund: Working Paper , 97/174.
Ahmed, M. U., Muzib, M., & Roy, A.(2013). Price-Wage Spiral in Bangladesh: Evidence from ARDL Bound Testing Approach. International Journal of Applied Economics,10(2),77-103.
Al Omran, R., & Al Omran, S. A. (2015). The Effect of Productivity of the Work Force on the Wages in Iran. Productivity Management, 35, 65-81, (In Persian).
Amini, A. A., & Mansuri, F. (2008). The Analysis of the Factors Affecting the Employment of the Youth in different Major Economic Sectors of Iran. Economic Research Journal,3(7),121-139,(In Persian).
Arman, S. A., Kafili, V., & Ghorban Nejad, M. (2014). The Study of the Mutual Relationship between the Minimum Wage and Unemployment. The Scientific Research Journal of Applied Economic Studies of Iran. 3(12), 221-236, (In Persian).
Baseri, B., & Roshani Yasaghi, N. (2014). The Study of the Effect of Entrepreneurship for Small Industries in Golestan Province. Financial Economic Periodical, 8(26), 113-132, (In Persian).
Baseri, B., & Jahangard, E. (2007). Analysis of the Capacity of Agricultural Employment in Iran. Agricultural Economics and Development, 15(59), 119-146, (In Persian).
Bean C. R., & Pissarides C., (1993). Unemployment Consumption and Growth. European Economic Review, 37, 837-859.
Blanchard, O. J. (1986). The Wage Price Spiral. The Quarterly Journal of Economics, 101(3), 543-565.
Bräuninger, M., & Pannenberg, M. (2002). Unemployment and Productivity Growth: An Empirical Analysis with in Augmented Solow Model. Economic Modelling, 19(1), 105-120.
Daveri, F., & Tabellini, G. (2000). Unemployment, Growth and Taxation in Industrial Countries. Economic Policy, 15(30), 48-104.
Peneva, E. V., & Jeremy, B. R. (2015). The Passthrough of Labor Costs to Price Inflation. Finance and Economics Discussion Series. Washington: Board of Governors of the Federal Reserve System.
Iran Newspaper.(2010).About the Definition of Employment,(In Persian).
Isazadeh, S., & Mehranfar, J. (2013). The Study of the Effect of International Migration on the Rate of Employment and Wage: The Case of the Economy of Iran, 48(2), (In Persian).
Kerbasi, A. R., Esnaesheri, H., & Agel, H.(2008). Forcasting Employment in Agriculture Section in Iran. Journal of Economic and Agricultural Development, 22(2), 31-43, (In Persian).
Khachatryan, A., Grigorian, M. D. A., & Sargsyan, G. (2004). Exchange Rate, Money, and Wages: What is Driving Prices in Armenia?. International Monetary Fund.
Kianmehr, M.V.(2006). The Study of the Effect of Unemployment with a Focus on the Social Disorders. Taavon Montghly,183,60-63,(In Persian).
Mehrgan, N., & Rezayi, R. A. (2009). Does Minimal Wage Increase Inflation?. The Journal of Economic Research, 11, (In Persian).
Mohajerani, A. A. (2005). Unemployment: Reasons, Dimensions, and its Fluctuations in Iran. The Periodical of Economic and Political Information, 219 & 220, 4-8, (In Persian).
Moteveseli, M. (2006). The Functioning of the Market Economy in Solving Unemployment in Iran. Journal of Economic Research, (73),107-132, (In Persian).
Musayi, M., & Garshasbi Fakhr, S. (2010). The Study of the Relationship between Unemployment and Drug Smuggling in Iran. The Periodical of Social Issues of Iran, 1(2), 145-168, (In Persian).
Nasrollah Nia, M., Maddahi, M. E., & Rahmanizadeh, F. (2014). The Study of Productivity Level in Iranian Economic Development and Some Members of Asian Productivity Organization. The Scientific Research Periodical of Financial Knowledge for Analysis of the Bonds, 23, (In Persian).
Ning, X. (2004). Unemployment and Productivity Growth: An Empirical Analysis of Causality, Phd Thesis.
Oscar Vargas, F. (1991). The Social Science and the Problems of Youth Unemployment in the World, United Nations, Educational, Scientific and Cultural Organisations. Youth National Organizatio, 1, 134-145.
Presidential Report. (2007). The Ministry of Work and Social Affairs in the Ninth Government: The Approaches and Achievements with a Focus on Entrepreneurship, 1(2), 145-168, (In Persian).
Rahmani T., Behpour S., & Ostadzad, A. H. (2013). An Empirical Examination of the Relationship between Productivity and Unemployment:Simultaneous Equations Approach. Quarterly Journal of Economic Research and Policies, 21(67), 153-170, (In Persian).
Sam Aram, E. A.(2003). The Role of Social Factors in Unemployment among the Youth, Work and Society, 51, 34-38, (In Persian).
Seidayi, S. E., Bahari, I., & Rayi, A.(2011). The Study of the State of Employment and Unemployment in Iran between 1985-2010. Yas Strategy Periodical, 25, 216-247, (In Persian).
Yusefi, A., & Akbari, H.(2011). A Sociological Analysis of Identification and Determining Priorities in the Social Affairs of Iran. The Periodical of Social Affairs in Iran, 2(1), 195-223, (In Persian).
