Modeling Determinants of Formal and Informal Sector Employment in Iran Using Nonlinear Bayesian Averaging Approaches

Message:
Article Type:
Research/Original Article (دارای رتبه معتبر)
Abstract:
The present study aims to model the factors affecting formal and informal sector employment in Iran, taking into account the unique conditions of this market. The research spans the period from 1991 to 2020. In this study, 43 variables influencing formal and informal sector employment were incorporated into a Bayesian averaging model. Results indicate that among the BMA, TVP-DMA, TVP-DMS, BVAR, and OLS models, the BMA model was identified as the most efficient. Based on the BMA model, 11 non-fragile variables affecting formal and informal sector employment were identified. The findings revealed that diverse factors influence employment in both sectors.  For the formal sector, the most impactful variables include education level, service sector value-added, economic growth, structural change index, real wages, consumer price inflation, government current expenditures, privatization, minimum wage, oil revenues, and sanctions. In the informal sector, the business environment index, service sector value-added, business cycles, economic globalization index (KOF), producer price inflation, labor productivity, interest rates, government construction expenditures, oil revenues, and sanctions emerged as the most significant determinants of employment.
Language:
Persian
Published:
Journal of Population Association of Iran, Volume:19 Issue: 38, 2025
Pages:
449 to 494
https://www.magiran.com/p2840793