In this research, the dynamic effect of globalization on unemployment rate in Iran is investigated during the period 1971 to 2006 using Johansen-Juselius co-integration test. Thus, the trade intensity index (ratio of total exports and imports to GDP) as a measure of globalization have used. Also in this model, gross domestic product, the consumer price index as well as other variables affecting the unemployment rate have considered. Findings show that the globalization has a significant and negative effect on unemployment rate. The value of error correction coefficient is equal to -0.46 implying that around 95% of the unemployment rate adjustment occurs after two years.

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