An Analysis of Labor Demand Models in the Third Development Plan and Proposal of Appropriate Models

The results of performance evaluation in the creation of employment during the recent years indicates that employment goals in the third development plan were not achieved while goals in the area of production and investment growth rates were fulfilled accordingly. The analysis of labor demand models in the third development plan is conducted in order to identify their weaknesses in predicting employment level as well as to propose appropriate models with the aim of predicting employment level the fourth development plan. The models of labor demand functions suffered from considerable problems in regard with statistical data, modeling and estimating methods. This research paper tries to locate and analyze them. After solving the problems of the third development plan model, the paper proposes a suitable model for estimating sectoral labor demand functions. The model is dynamic one. Value added, real wage and employment variables have been included in the model. In the end, the paper estimates the amount of employment policies achievements in the first four years of the third development plan by means of the mentioned model. According to the results, about 70 percent of the goals in the development plan's employment policies were achieved.