The Effects of Industrial Spillover on Unemployment in the Provinces of Iran

Document Type : Original Article


1 Associate Professor of Economic, Faculty of Social Sciences, Razi University, (Corresponding Author)

2 Assistant Professor of Economic, Faculty of Social Sciences, Razi university

3 MA in Economic, Faculty of Social Sciences, Razi university



One of the main problems of Iran’s economy is the high unemployment rate. Thus, recognizing the factors affecting unemployment is an important step to reduce the social undesirable effects of unemployment. The study investigates the spillover effects of industrialization on unemployment by using the provincial-level data for the 2006-2015 period and the spatial econometric approach. Evidence from the model estimation shows that industrial development and economic growth have a negative and significant effect on unemployment, but the effect of the population on unemployment is positive and statistically significant, as a one percent increase in industrialization and production, the unemployment rate is reduced by 0.089 and 0.098 percent respectively. The spillover effects of industrialization are negative and insignificant and this is due to the lack of fundamental development of industry in the provinces of Iran. Therefore, the development of industry in each province based on relative advantages and land-using policy, improving the quality of the educational system to empower the workforce is the effective policies for reducing unemployment.


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