Investigating and Comparing the Effects of Corporate Income Taxes and Government Expenditures on Unemployment Rates in Iranian Provinces

Document Type : Original Article

Author

Assistant Professor, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran

Abstract

Investigating and Comparing the Effects of Corporate Income Taxes and Government Expenditures on Unemployment Rates in Iranian Provinces

Abstract:

Unemployment is one of the most significant economic and social issues in the country, with extensive implications for people's lives and economic development. Reducing the unemployment rate through various policies, including changes in government expenditures and tax rates, is a matter of concern. Given the importance of the issue of unemployment at the provincial level in Iran and the necessity of identifying the factors affecting it, this study seeks to investigate and compare the effects of corporate income taxes and government expenditures on the unemployment rates in Iranian provinces during the years 2008-2021. The model under study is dynamic, as the unemployment variable is influenced by its past values, thus creating autoregressive conditions. Accordingly, the econometric method used in this study is generalized method of moments (GMM). The results showed that corporate income taxes, the unemployment rate in the previous period, and urbanization have a positive impact on unemployment. On the other hand, economic growth variables and the government expenditure index have a significant negative effect on unemployment. Considering that the coefficient of corporate income taxes is greater than the estimated coefficient of government expenditures, corporate taxes have a more significant impact on the unemployment rate than government expenditures. Based on the results, it is suggested that the policy-making process should prioritize reducing corporate income taxes and allocating government expenditures towards job creation and business development.

Keywords: Corporate Income Taxes, Government Expenditures, Unemployment, Iranian Provinces, GMM.

Keywords

Main Subjects

References

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Public Sector Economics Studies
Volume 2, Issue 4
February 2024
Pages 427-446

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History

  • Receive Date: 22 December 2023
  • Revise Date: 24 February 2024
  • Accept Date: 24 February 2024

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