The Role of Agriculture in Job Creation and Income Distribution: A path Decomposition Analysis

Job creation and reducing income inequality are two major objectives of the economic development plans in Iran. In this study, it is tried to evaluate the role of the agricultural sector in getting access to these objectives. To this end, an SAM was initially developed, based on the latest input-output table published by Iran's Statistical Centre in 2001, then the related labor and income multipliers for agricultural sector, and as well for other sectors were assessed. Finally, path decomposition analysis was utilized to determine the path with the largest affecting factors on employment and income generation. Results revealed that agricultural sector bears a high potential in creating jobs and generating income especially for low income groups. Sub-sectors including horticulture, animal husbandry, and crop production sectors carry the largest potentials in creating jobs and shrinking the gaps among rural and urban households and between low and high income groups in both rural and urban areas