The Impact of Information and Communication Technology (ICT) on Informal Employment in Iran: DSGE Approach

The information and communication technology are one of the major factors that impacts the labor market. It has always affected the nature and type of employment in the labor market, changing the type of employment from permanent, stable and formal to contractual, temporary, unstable and informal. Therefore, it is important to study the impact of information and communication technology on the labor market. This study examines the impact of information and communication technology on labor market in the context of Iran’s economy during the period 2009 to 2019, using the Stochastic Dynamic General Equilibrium (DSGE) model, focused on duality of labor market (formal and informal). The results of the study show that the development of information and communication technology impacts both formal and informal sectors through creating job opportunities, employment, production and consumption. A survey on response functions shows that an ICT impulse initially increases formal and informal employment, but the rate of formal employment decreases after a while, and the rate of informal employment increases. It will also shift the population outside the labor force in to the labor force population, contributing to the increase of labor supply.