Application of Modified Extraction Method in Employment Generation in Iran

Application of the traditional method(TM) in measuring the sectoral employment generation has some drawbacks. Therefore, the results could be misleading. To tackle the defects, Meller and Marfan proposed the Hypothetical Extraction Method (HEM). Like the TM, the HEM uses the intermediate transaction as a basis for measuring employment generation, which seems a necessary not sufficient condition. This paper confirms that necessary and sufficient conditions for policy-making and planning in sectoral employment require both real sectoral final demands and inter-sectoral intermediate transactions. To our knowledge, the HEM has been overlooked by the Iranian researchers. The Proposed Modified Method (PMM) satisfies both conditions. The updated 2011 Input-Output table has been used to operationalize TM, HEM and PMM under the following question: which method provides the real picture of the sectoral employment generation? Overall findings reveal that: a) in TM and HEM, agriculture sector is preferred to industry sector; b) in PMM, industry sector is more important than agriculture sector in terms of direct and indirect lost employment; c) when we use only indirect lost employment in identifying sectoral employment generation, industry, construction, wholesale and retail sectors get the first to third ranks, whereas agriculture sector appears in fourth rank