The Impact of Producers and Consumers Support Policies on Employment in the Agricultural Sector

Document Type : Original Article

Authors

1 PhD Student of Agricultural Economics, Faculty of Economics and Development, University of Tehran, Tehran, Iran

2 Professor of Agricultural Economics, Faculty of Economics and Development, University of Tehran, Tehran, Iran

3 Assistant Professor of Agricultural Economics, Faculty of Economics and Development, University of Tehran, Tehran, Iran

Abstract

As one of the most important productive inputs, workforce plays a significant role in the economy of any country. This factor has a dual role in economic planning so that on the one hand, it acts as a development agent, and serves as a development goal on the other hand. At present, one of the main issues of Iran's economy is unemployment and it consequences. Among the policies that seem to be effective are government support policies. Therefore, this research investigated the effect of producer and consumer support policies on agricultural employment in the period of 1981-2012 using Vector Error Correction Model (VECM). The results indicated that consumer and producer support policies in agricultural sector had a positive and significant effect on the employment of the agricultural sector in the country (Iran). Also, the results show that inflation and capital to cultivated area ratio during the studied period had a negative effect on employment in agriculture sector. These results disapprove the Phillips curve in Iran's agricultural sector and confirm the substitution relationship between capital and workforce in this sector. The coefficient of ECM model, which indicates the modulation rate of the short-term dynamic pattern toward long-term equilibrium, is equal to -0.149 indicating that 15% of the imbalance error will be eliminated in each period.

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