What is wrong with Iran’s unemployment data?
As I wrote in another post a few weeks ago, every time a western reporter writes about unemployment and inflation in Iran, he or she seems obligated to say that the actual rates are twice the official rates. Often an “expert” is present to give this made-up claim an air of expertise. (See examples for unemployment here and here, and on inflation here and here.) I have not seen the claim repeated for inflation in 2008 ( I guess President Ahmadinejad took care of that in 2008 by doubling the actual inflation rate!), but for unemployment it is still being reported.
It is easy to dispel the myth that actual inflation has been always twice the official rate. If you take a calculator and punch in the price of anything in 1990 and then increase it every year at twice the rate of official inflation, you would know what I am talking about. But what about official unemployment data? Is there a way to check their veracity? The answer is yes.
Take the latest census. Average unemployment according to the 2006 census is 12.4%, which is pretty high but it is about the average for the Middle East and lower than Spain’s 17.4% now (admittedly Spain is having a tough time with the global recession, but its unemployment has not been below 10% for some time). Now look closer in the census data, as many have, for unemployment rates for men and women by age. What you will see should amaze you, unless you are a young person without a job:
Of the 3 million unemployed persons in 2006, three-quarters (2.3 million) were below age 30! Unemployment rates for young people in their early twenties were above 20 percent for men and 40 percent for women. If you make it past age thirty, you might as well be living in a different country because your risk of unemployment would drop to single digits, around 5 percent.
I know of no other labor market that treats its young as badly as does Iran’s. This is not just a problem for youth, however. The vast majority of unemployed youth are supported by their parents. More than 70 percent of youth in their twenties live with their parents. Naturally, their parents are suffering as much if not more than the young themselves. It is not fun seeing your children hang around the house after they have graduated from college, engaging in odd jobs or waiting for a suitor to call.
Enough of the tragic condition of unemployed youth and their parents, which is not for me to tell others about, having tenure and all. As long as you agree with me about the shape of this curve, we are set to go. Unemployment for youth is twice the national average (for young women more nearly four times), and for older people less than half.
Now think back to the problem I started with: double the official unemployment rate from 12.4% to 24.8%, as experts recommend, and ask yourself how you would draw the same graph? Since you agreed with me (and with the official census) on its shape, you are forced to lift everything up by a factor of two. Your new graph–or the experts’, rather– is looking pretty strange. At over 80% unemployment rate, there are hardly any young women working!
If you are not sure what to do, well, ask the experts!