Income Share and Labor Demand Elasticities of Iran’s Industry with Emphasize on Economic Growth

Document Type : Scientific paper

Authors

1 PHD student at Economics department, Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

2 Professor of Economics , Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

3 Associate professor at Allameh Tabataba'i University, Tehran, Iran

Abstract

This paper firstly investigated the affecting factors on labor income share, and in the second phase, by using the previous estimation, own-wage, cross, and output elasticity of the labor will be calculated. With regards to the fact that the dependent variable was limited to the interval 0 and 1, a Fractional Panel Probit technique has been used for the period of time from 2004 to 2014 and the provincial level for firms with having more than 100 employees. The results of the first phase represent, labor income share is increased by increasing wages and ratio of skilled to unskilled employees. If the value of the raw, premium paid and capital price increase, the dependent variable will rise. In the second part, according to the theoretical, the relationship between labor and wage was obtained negative. There is a positive sign for output-employment elasticity that was obtained 0.52. The results show cross elasticity of capital price and labor demand is negative and reveals a complementary effect. Based on research results and since Iran’s labor market is suffering from labor demand shortage and high unemployment, it is suggested that the economic policymaker should apply appropriate facility to increase industrial growth, eliminate production barriers, reduce the risk of investment and improve human resources skills in accordance with the requirement of industrial sectors.

Keywords

References

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Macroeconomics Research Letter
Volume 14, Issue 27
November 2019
Pages 225-252

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History

  • Receive Date: 09 July 2018
  • Revise Date: 30 November 2019
  • Accept Date: 03 December 2019

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