The Impacts of Tariff Cuts on the Iranian Labor Market: Case Study of Agricultural, Food, Apparel and Textile Sectors

In this paper, the effect of trade openness on the level of employment and the rate of wages has been evaluated by using a computable general equilibrium model. The results represent that through the cuts of general imports tariff, the percentage changes of total employment level as well as the employment level of unskilled labor will be increased. Likewise, by decreasing the percentage of skilled labor wages to follow more tariff cuts, wages inequality is improved. Also, it is clear that more tariff cuts on food, apparel and textile commodities will decrease the percentage changes of total level employment and unskilled labors. Since, the percentage changes of skilled labor wages will be increased in comparison with unskilled labors by increasing tariff cuts. Thus, it can be concluded that wider trade openness in the food, apparel and textile commodities leads to the increase of wages inequality. However, under the effect of the tariff cuts in agricultural commodities, the percentage changes of total employment as well as the employment of unskilled labors will be increased and by the decline of percentage changes of skilled labor wages, there is a decrease in the inequality of wages between skilled and unskilled labors.