Investigating the role and effects of private and public investment on employment in provinces of Iran: GMM approach

Considering the investment importance in the economic sectors and its impact on the macroeconomic variables, including production and employment, and due to limited resources in the economy, the study of the efficiency of capital employed in the society by the private and public sectors have particular importance. Therefore, in this research, the effects of private and public investment on employment in 30 provinces of Iran, during the period of 2005-2015 were investigated using generalized moments method and by three different models: private, government and general employment. The results of private employment model estimation indicate improving labor market caused by increasing private employment, which is a positive relationship not only in the current period but also as a function of past investment. In the estimation of general employment model, public investment effect in the current and past period on employment of this sector has been negative and significant. In other words, investments made by the government have not been able to improve the employment market and solve the unemployment problem. This result is even evident in the total employment model. The simultaneous study of private and public investment and its impact on total employment indicate positive effect of private investment and the negative effect of general investment on total employment.