Labor Law and Industrial Development in Iran's Economy

In the literature of development economics، institutions are regarded as necessary grounds in the absence of which، economic growth and development will not take place fully. Laws and regulations are among institutions which play an important role in setting the direction of economic activities and labor law is a prominent instance of those laws in Iran. This law was amended in 1990 to provide more support for workers in comparison to its predecessor، but also imposed more liabilities on employers. This paper reviews impact of this measure on Iran’s industrial sector. Theoretical arguments have pointed to various، and sometimes contradictory، effects of the amendment. The findings of this study، which has taken advantage of combined data related to workshops with 50 workers in the period between 1988 and 2002، show that changes in Iran’s labor law have helped to increase the share of the country’s industries in the national economy and have facilitated industrial development in Iran.