Planning and Budgeting

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Unemployment growth problem in the undeveloped and developing countries including Iran has underlined the need to determine and measure unemployment in these economies as well as to think out policies so as to develop the industries with more employment potentials. To this end, the paper uses the 1991 input-output model and calculates various industry employment potentials through various ways that intellectuals such as Rass Mussen and Hozari have proposed. It also makes use of two reforming methods put forward by Diamond. The results reveal that although employment is expected to rise rapidly in the industry sector of developing countries, the presence of excessive disorder in the production factor prices most often considerably restricts the recruitment capacity in this sector. From among the disorders, one might refer to the new wage rates in factory industries, which are usually higher than the social costs of work. Meanwhile, capital goods are valued with fewer prices. This research paper makes known that the key industries (from the employment point of view) highly contrast with the industries regarded as key ones from the output standpoint. It is to be noted that the former group does not lie in the domain of industry. Accordingly, the paper considers agriculture within the framework of key industries in three models out of the four applied. In other cases, key industries lean more toward service sectors. In fact, reaching a high level of employment necessarily needs neglecting some percentage of margin production growth in favor of employment. This has been tested in a country like India. Furthermore, the presence of employment-wise key industries within the service sector indicates that since Iran’s economic structure has not yet attained industrial maturity level and non-industrialization period (Clark-Fischer Theory), undoubtfully a good deal of employment within the service sectors must have originated from positive income elasticity of these sectors. Thus, indeed an all-out research should be conducted on the structures of unofficial economic sectors and services. Industry sector income elasticity for demand of such unofficial sectors or vague economic sectors is negative. The poorest performance in employment potentials is that of crude oil and natural gas that has played very little role in the employment.

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