Exploring The Impacts of International Immigration on Employment and Wage Rate in Construction Sector: Case Study of The Economy of Iran

Iran is one of the most concentrated areas of Afghan migrants and refugees. Most Afghans dispersed throughout the country mixed with Iranian households. The majority of Afghan immigrants are typically unskilled and illegal workers. This study aims at investigating the nature of the causal relationship between Afghan immigrants and two main labor market indicators، average wages and unemployment rate، in Iran using autoregressive distributed lag (ARDL) bounds testing procedure and Granger-causality within vector error correction model (VECM) based on annual data spanning the period between 1976 and 2006. Results of the ARDL bounds test are supportive of the theory that the variables are in a long-run equilibrium level relationship. Results of the Granger-causality tests support the existence of a long-run، bidirectional causality between immigration and unemployment. While in the short run there is unidirectional Granger causality running from immigration to unemployment rate.