Factors affecting changes in the share of employment between the services and industry-mining sectors

In this study, the reasons for the change in the share of employment between the two sectors of services and industry-mining during the years 1968-2016 have been investigated by using the method of Auto-Regressive Distributed Lag (ARDL). According to the theoretical foundations, low productivity of the services sector, increase in per capita income, high capital stock in the services sector, increase in population and rent of natural resources (revenues from oil and gas) are among the important variables that affect the raise in the share of employment in the services sector compared to the industry-mining sector. The results show that the low productivity of the services sector compared to the industry-mining sector and the growth of the total population are two main factors increasing the employment share of the services sector. Revenues from oil and gas exports along with other sub-variables such as raising the exchange rate and government spending have been other factors in raising the share of employment in the services sector. Contrary to the theoretical foundations, per capita income variables and high capital stock in the services sector is not the reason for the increase in the share of employment in the services sector compared to the industry-mining sector in the Iran economy.