Authors
Abstract
Decreasing unemployment rate is one of the most striking objects for economic planners and decision makers; and achieves to this, will lead to solve a lot of economic and social problems. According to theory and empirical studies, total factor productivity growth has a determinant role in unemployment rate. This study investigates the impacts of total factor productivity on the unemployment rate in the economy of Iran, based on annual data spanning the period 1971-2009. Results of the study indicate that total factor productivity growth has a significant and negative effect on unemployment rate of Iran's economy in the short-term and long-term. On the one hand, Granger causality test shows two-way causality relationship between unemployment rate and total factor productivity rate in economy of Iran, both in the short-term and the long-term. Thus, promoting the level of technical knowledge (technology) and enhancing motivation of workforce for more and use full work as well as avoiding of determining wages as imperative and other production factors, can move toward increase total factor productivity and reduce unemployment rate of Iran’s economy.
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