Investigating the Impact of Transportation Investment on Job Creation through Induced Economic Production

Document Type : Original Article

Authors

1 Assistant Professor of Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University

2 Ph.D Candidate in Transportation Engineering, Payam Noor University, North Tehran Branch

3 Assistant Professor of Civil Engineering, Payam Noor University, North Tehran Branch

Abstract

In this study, the direct and indirect effects of transportation sector investment on the creation of value-added and jobs in the economy were studied. For this purpose, after estimating the relationships using ARDL method for the period of 1959-2014, the short-run, long-run, and error correction models estimated. In long-run estimation, the production elasticity of transportation sector relative to the capital is more than twice as large as non-transport sectors. According to these results, and the finding that 1 percent increase in the total value-added leads to 0.3 percent growth in the job creation in the economy, the effect of transport sector investment on the creation of total value-added and jobs reviewed. The results of the shock scenario simulation in the transport sector investment showed that one percentage increase in this variable generated an average of 0.235% growth in the economic value-added and a 0.07% increase in the number of created jobs during the simulated period. According to the nearly 10% share of transportation on the total value-added, this shows a significant effect. Therefore, given the significant effects of transportation in the economy, this sector has the relative ability to develop direct and indirect employment from the channel of production boost.

Keywords

References

-   Ademola A. S. & Badiru, A. (2016). The impact of unemployment and inflation on economic growth in Nigeria (1981-2014). International Journal of Business and Economic Sciences Applied Research, 9(1), 47-55.
-   Akhbari, R. & Amadeh, H. (2015). Analysis of the Cointegration relationship between unemployment rate and economic growth: evidences of Iran's economy. Quarterly Journal of Economic Research, 15(59), 125-160 (In Persian).
-   Aldonat Beyzatlar, M., Karacal, M. & Yetkiner, H. (2014). Granger-Causality between Transportation and GDP: A Panel Data Approach. Transportation Research Part A: Policy and Practice, 63, 43–55.
-   Babazadeh, M., Ghadimi, K. & Mohseni, R. (2009). Effects of Investment on Transport sector on Economic Growth of Iran. Quarterly Research Journal of Commerce, 50, 157-199 (In Persian).
-   Beyzaei, S. E. (2003). Applied Principles of Transportation Economics, Samt Press (In Persian).
-   Boopen S. (2006). Transport Infrastructure and Economic Growth: Evidence from Africa Using Dynamic Panel Estimates. The Empirical Economics Letters, 5(1), 37-52.
-   Caraiani, P. (2006). Alternative Methods of Estimating the Okun Coefficient Applications for Romania. Romanian Journal of Economic Forecasting, 3(4), 82-89.
-   Central Bank of Iran, Department of Statistics and Data. Economic Times Database. http://www.cbi.ir
-   Daei Karimzadeh, S.,  Emadzadeh, M. & Kamkar, H. (2011). The Effect of Government Investment in the Transportation Sector on Economic Growth in Iran. Quarterly Journal of Economic Modeling, 3(4), 63-82 (In Persian).
-   Gujarati, D. (2005), Econometric Foundations, Tehran University Press (In Persian).
-   Jiang, X., He, X., Zhang, L., Qin, H. & Shao, F. (2017). Multimodal transportation infrastructure investment and regional economic development: A structural equation modeling empirical analysis in China from 1986 to 2011. Transport Policy, 54, 43-52.
-   Khaksari Rafsanjani, A. & Asadi Sisakht, A. (2017). An Investigation and Comparison of Road Transport Indicators among the Provinces of Iran. International Journal of Transportation Engineering, 4(4), 275-286.
-   Mahmoudi, A. (1997). Transportation Economics. Eghtesad'e Now Press (In Persian).
-   Maparu, T. S. & Mazumder, T. N. (2017). Transport infrastructure, economic development and urbanization in India (1990–2011): Is there any causal relationship? Transportation Research Part A: Policy and Practice, 100, 319-336.
-   National Portal for Statistics, Statistical Yearbooks and National Accounts www.amar.org
-   Okun, A. M. (1962). Potential GNP: Its Measurement and Significance. American Statistical Association, Proceeding of the Business and Economics Statistics Section, 7, 98-104.
-   Petkov, B. (2008). The Labour Market and Output in the UK does Okuns Law Still Stand? , Discussion Papers: Bagarska Narodna Banka. 69.
-   Pradhan, R. P. & Tapan P. B. (2013). Effect of transportation infrastructure on economic growth in India: The VECM approach, Research in transport economics, 38(1), 139-148.
-   Razavi, M. & Moshrefi, R. (2004). Dynamic Analysis of Employment in Iran's Economy (Case Study of the Law of Okun). Quarterly Journal of Iranian Economic Research, 6(18), 1-37 (In Persian).
-   Sadiku, M., Ibraimi, A. & Sadiku, L. (2015). Econometric Estimation of the Relationship between Unemployment Rate and Economic Growth of FYR of Macedonia. Procedia Economics and Finance, 19, 69 – 81.
-   Saidi, S., Shahbaz, M. & Akhtar, P. (2018). The long-run relationships between transport energy consumption, transport infrastructure, and economic growth in MENA countries. Transportation Research Part A: Policy and Practice, 111, 78-95.
-   Seifollahi, N., Emami, A., Amadeh, H. & Taklif, A. (2017). Investigating Impacts of Oil Prices on Economic Growth with Emphasis on Investment Role. Journal of Economics and Modelling, 8 (25), 149-168 (In Persian).
-   Tariq M., Y., Wang, A. & Saeed, A. (2016). The impact of transportation infrastructure on economic growth: empirical evidence from Pakistan, Transportation Letters. The International Journal of Transportation Research, 9(2), 63-69.
-   Tatoglu, F. Y. (2011). The Long and Short Run Effects between Unemployment and Economic Growth in Europe. Dogus Universitesi Dergisi, 12(1), 99-113.
-   Tingi, N. Y. & Lingii, L. S. (2011). Okuns Law in Malaysia: An Autoregressive Distributed Lag (ARDL) Approach with HodrickPrescott (HP) filter. Journal of Global Business and Economics, 2(1), 95-103.
-   Zibaee, H. (2016). A Model for Predicting Investments in Iran's Economic Sectors. Journal of Planning and Budjet, 87, 23-41 (In Persian).
Journal of Economics and Modelling
Volume 9, Issue 2 - Serial Number 34
September 2018
Pages 125-154

Files

Share

How to cite

Statistics