The Potential Effects of Eliminating the Tariff Barriers for Agricultural Sub-Sectors on Direct and Indirect Employment

In recent years, trade liberalization has become one of the main objectives of governments and policymakers. In this regard, removing import tariffs is the most important step that can have significant effects on production, employment and welfare. Undoubtedly, eliminating tariffs will reduce domestic producer's power over the foreign producer, and this will affect employment in the entire economy. Accordingly, the present study examines the effects of removing agricultural sub-sectors tariffs on direct and indirect employment using the input-output table in 2011. To achieve the research goal, after import tariffs were calculated for agricultural sub-sectors, the effects of eliminating import tariffs were examined on agricultural sector and its sub-sectors including agriculture, horticulture, animals breeding, forestry and fishing on employment. Thus, due to the removal of agricultural import tariffs, will be created 3.7 percent and 2.6 percent reduction in direct employment and indirect employment, respectively. As a result, due to trade liberalization in the agricultural sector, indirect employment will decline more than direct and indirect employment. Based on indirect employment index, in scenarios eliminating import tariffs for agriculture and horticulture, animals breeding, forestry and fishing, decrease by 5.4, 0.26, 0.52 and 0.03 percent respectively. According to these results, it can be said that removing the tariff barriers of agricultural sub-sectors, in addition to reducing direct employment, also leads to a reduction of indirect employment and more effective on sectors that have strong links with this sub-sector. Therefore, it is recommended, the government pay attention to indirect effects on the employment sector to other sectors before any action to remove import tariff sectors.