Evaluating of Impact of Import Competition on Employment (Iran’s Manufacturing Industries)

According to economic theories it can be stated that along with decreasing the imported commodity prices and increasing the demand for foreign imports, domestic production and employment is decreased. This is reflected in the impact of import competition and the impact of import competition on the level of employment. Therefore, understanding how employment reacts to the prices of imported goods is important for economic policy-making. This paper focuses on the hypothesis that employment in Iran’s manufacturing industry has been affected by import competition during 1995-2011. This is examined using the panel data. In this study, based on the theoretical foundations, employment as the dependent variable, and import price index, the interaction of import competition and share of imports, wages, share of imports, capital cost, and energy consumption as independent variables, are considered. The results of this study demonstrate that variables including the share of imports, the price of import, and  the interaction of import competition and share of imports have significant positive effects on the employment level. These results indicate that the employment in Iranian manufacturing industries is affected by import competition.