The Impact of Unemployment on Employed Households

Document Type : Research Paper


Faculty of Economics and Political Science, Shahid Beheshti University


Unemployment is a common but alarming phenomenon in our country's economy that brought about many social and economic problems. The paper attempts to investigate one of the economic harms caused by unemployment that has been less studied. It seems that not only unemployment affects the consumption of unemployed households, but it also affects employed households .in the way that unemployment, as a modifying factor of income expectations, affects household consumption .To study this issue, this article attempted to specify a formula for consumption based on economic theories and estimated its coefficients through using household income-expenditure data provided by the Statistical Center of Iran and employing panel data method. Results indicate that households, in the face of rising unemployment at the community level, reduce their consumption by 1.5% in response to one percent increase in unemployment rate. Moreover, their share of food consumption increase while the share of nonfood expenditures tends to fall.
JEL Classification: D12، D82، J64، D84، C23


Main Subjects

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Volume 53, Issue 4 - Serial Number 125
December 2018
Pages 971-987
  • Receive Date: 06 December 2017
  • Revise Date: 24 March 2018
  • Accept Date: 08 May 2018
  • First Publish Date: 22 December 2018