Public Expenditure and Human Resource Productivity in Iran

Public spending is a necessary requirement in every state for doing its tasks in the areas of education, health, security, and defense. How to spend on these expenditures can, directly and indirectly, impact the productivity of human resource. This paper seeks to examine the proportion of these expenditures together and their impact on the productivity of human resource. This study was conducted during the period 1990 to 2015 and the generalized least squares and Granger causality method was used to investigate the effect of public expenditure. The results of the causality test showed that there is a one-way causal relationship between educational expenditures and health expenditures and there is no causal relationship between military expenditures and human resource productivity. On the other hand, the results of the model's estimation indicate that the health and military expenditures dont effect on human resource productivity, which indicates the health expenditures are not properly spent by the government and military expenditures dont have the role of complementary or competing for two other components of public expenditure.