The Analysis of the Impacts of Oil Revenues Redaction on Employment in Iran: A CGE Approach

Document Type : Original Article

Authors

1 Department of Economics, The Faculty of Islamic Studies and Economics Imam Sadiq University

2 PhD Student in Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University

Abstract

Since Iranian government’s budget is depends to oil revenues, it is expected that oil price fall affect all markets especially labor market in Iran. In this paper, we analyze the effects of oil revenue fall on skilled and unskilled labor employment, using a multi sector computable general equilibrium model. The results are investigated based on 2011 Micro Consistent Matrix. Based on the findings of this paper, oil revenue decrease affect activity level and employment of labor in sectors differently, such that the activity level of all sectors and the unskilled labor employment in all sectors will decrease. The skilled labor employment, on the other hand, will fall in “services” sector, while it will increase in all other sectors. Moreover, the results reveal a substitution of skilled labor to unskilled labor in all sectors after falling oil revenue.    

Keywords


Abrishami, H,. Mehrara, M,. Ghanimi Fard, H & Keshavarzian, M. (2008). The impacts of Fluctuations in oil prices on economic growth in some OECD countries by explicit nonlinear oil prices. Journal of Knowledge and Development. No. 22. pp. 7-22, (In Persian).
- Ahmad, F. (2013). The Effect of Oil Prices on Unemployment: Evidence from Pakistan. Business and Economics Research Journal , Vol 4.
- Fallahi, M.A,. & Peighambari, S. (2007). Assessing the interaction between OPEC oil basket price growth rate and economic growth of OECD. Humanities and Social Sciences. No. 22. pp. 97-126, (In Persian).
- Farzanegan, M. R., & Gunther, M. (2009). The effects of oil price shocks on the Iranian economy. Energy Economics 31, 134-151.
- Hamilton, J. (2003). Oil and macro-economy since world war II, Jounalof political Economy 19, 228-238.
- Haqiqi. I., & Bahalou Horeh, M. (2013). Macroeconomics impacts of export barriers in a dynamic CGE model. Journal of Money and Economy 3, 117-150.
- Hasan zadeh, M,. Sadeghi, H,. Yusefi, A,. Sahabi, B. & Ghanbari, A. (2012). The effects of oil price volatility on the welfare of households in different income deciles: computable general equilibrium model approach. ECONOMIC RESEARCH: Volume 12, Issue 4, pp. 55 -77, (In Persian).
- Hertel, T.W. (1998). Global Trade Analysis: Modeling and Applications. Cambridge University Press, Cambridge and New York.
- Lardic, S., & Mignon, V. (2008). Oil prices and economic activity: an asymmetric co integration approach, Energy Economics, 30 (3), 847–855.
- Manzoor, D,. & Haqiqi, I. (2011). The effects of energy prices on the emission of environmental pollutants reform in Iran Computable General Equilibrium model. Environmental Studies, Volume 37, Issue 60, pp. 1-12., (In Persian).
- Manzoor, D,. Shahmoradi, A. & Haqiqi, I. (2010). The effects of energy subsidies in Iran's covert and overt, Energy Economics Studies Quarterly, Vol. VII, No. 26, (In Persian).
- Motavaseli, M,. & Fouladi, M.  (2006). The effects of rising oil prices on GDP and employment in Iran using a computational general equilibrium model, Journal of Economic Research, (In Persian).
- James, J., Marsh, I., & Sarno, L. (2012). Handbook of Exchange Rates. Wiley and Sons, New York and London.
- Jensen, J., & Tarr, D. (2003). Trade, exchange rate and energy pricing reform in Iran: potentially large efficiency effects and gains to the poor. Review of Development Economics 7, 543–562.
- Katz, L., & Murphy, K. (1992). Changes in relative wages, 1963-1987: supply and demand factors. Quarterly Journal of Economics 107 (1): 35-87. 
- RTI. (2008). EMPAX-CGE, U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Research Triangle Park, NC 27711.
- Rutherford, T. F. (1999). Applied general equilibrium modeling with MPSGE as a GAMS subsystem an overview of the modeling framework and syntax. Computational Economics, 1-46.
- Sarzaim, A. (2002), the impact of oil shocks on economic variables. Dissertation master, Tehran, Higher Institute of Research and Training in management and planning, (In Persian).
- Tayyebnia, A,. & Ghasemi, F. (1385). The role of commercial Tkanh‌Hay Iranian business cycles, Economic Journal, Vol. VI, pp. 49-80.
- Yadollahzadeh Tabari, N. (1992), The effect of rising oil prices on the economy (Dutch Disease). Master's dissertation. Tehran. Allameh Tabatabaei University, (In Persian).