Planning and Budgeting

Mendeley  

Zotero  

Pourmohammadi M, Yousefi K. (2021). Pandemic in Labor Market: Evidence from Iran. JPBUD. 25(4), 69-94. doi:10.52547/jpbud.25.4.69
URL: http://jpbud.ir/article-1-2015-en.html

During the last decade, Iran's labor market has been under pressure by the sanctions and the long-term Dutch disease which injects physical capital and energy subsidy into the market and crowds the labor force out of the production lines. This situation has engendered vulnerable groups of the labor force. Furthermore, the Covid-19 epidemic pushed an exogenous shock into the economy and created a natural experiment to identify the most vulnerable groups. This study investigates the heterogeneous effects of the epidemic on Iran's labor market. We assess four main measures, including participation rate, unemployment spells, working hours, and job destruction rate. First, the results show that the participation rate has decreased substantially for women and youth. Also, those who were unemployed before the pandemic are more likely to become inactive during the pandemic. Second, unemployment spells last more after the pandemic. Third, working hours have been reduced on average, it has been reduced for those who had incomplete employment before the pandemic, but unexpectedly has increased for those who had worked completely (40 hours/week) before the pandemic. Fourth, the job destruction rate is higher among low-medium size firms, as compared to micro-firms or large ones. The robustness of these results has been tested using a multivariate model of event studies at the individual level. Overall, the employment and income distributions have become worse for the vulnerable groups including part-time workers, young workers, and women. The policymakers should consider such nonlinearities and design a targeted support plan. Future research may carry out survival analyses or structural estimations to predict the transition period towards a new post-Covid19 equilibrium.