An analysis of the effects of taxes and GDP on employment in Iran’s economy

Abstract

Taxes are one of the sources of government revenue. With the increase of economical science and the involvement of government in different economic fields, obtaining a realistic and fair tax can solve many important social and economic issues of governments such as deficit, the unemployment sensations, and lessened urge of investment in production units. Tax and GDP are parts of macroeconomics variables which have noticeable impact on labor market. With regards to the important effect of economic policies on real economic variables such as employment, analyzing the relationship between tax and GDP and employment and the effects they have on employment seems to be a necessary step to take. This study analyses the effects of tax and GPD on employment in Iran during the years 1976-2007 based on the autoregressive distribution model (ARDL). The results obtained from the estimation of long-term and short-term pattern reveal that tax has a negative and significant effect on employment and GDP has a positive and significant effect on employment.