The relationship between employment and value added in the Iran's industry usingTime-Varying Model

It is logical that with industrial growth, the demand for labor will rise. Therefore, examining the employment potential of the industry can be helpful in policymaking. In this study, the relationship between employment and value added of industrial sector in Iran's economy during the years 1981-2017 was investigated using Time-Varying method and spatial-state model and the effect of value added on employment in all years was extracted. According to the results, added value and employment in the industrial sector have a negative relationship with each other, which means that there is condition of the jobless growth in the industrial sector in Iran. So that in 2017, employment will decrease by 1.14 percent, assuming the other variables remain constant, with a 1 percent increase in the real value added of the industrial sector. Wages and trade have also had a negative impact on employment in the industry over the years. The wage impact factor on employment in the industrial sector is -0.06 percent. Also for a dollar increase in industrial import value assuming other variables remain constant decline of 7.38×10-7 in industrial sector employment. According to the results, exports and employment have against effect on each other, such that, for a $ 1 increase in the value of exports of industrial goods in Iran, assuming the other variables are stable, employment is decease by 1.58×10-6. According to the findings of this study, foreign direct investment in industry has a positive and significant effect on employment in this sector.