The Economic Effects of Afghan Immigrants on Employment and Wage Level in Construction Sector of Iranian Economy

During last few decades, Iran has experienced a massive flow of immigrants from two countries of Afghanistan and Iraq as a result these countries social, political and economic instability. For the time being, the majority of immigrants in Iran are Afghans. Difference in level of economic development between Iran and Afghanistan is the main contributing factor to this phenomenon, while the cultural and religious commonalities also should not be ignored. The majority of Afghan immigrants are typically unskilled and illegal workers. They expect lower wages than their Iranian counterparts and are ready to work in difficult conditions. Keeping in mind that a high percentage of Afghan immigrants are working in the construction sector, it is expected that most effects take place in this sector of the economy. In this paper we study the impacts of Afghan immigrants on the employment and average real wages of construction sector in Iran, through time series data analysis and estimating regression equations using Ordinary Least Square (OLS) method. Results indicate that during the period under study (1976-2006), Iranian workers have been replaced by Afghan workers, and their employment rate has declined in the construction sector. Declining average wage rate in construction sector due to existing Afghan workers in Iranian labor market is another important result of this study.