The Impact of Labor Force Supply by Afghan Refugees on Unemployment in Iran

Immigration is one of main concerns of policymakers in situations of recession and low return on economic activities due to its impact on labor supply and pressure on unemployment. Over the past three decades, Iran has become a host country with a wide range of Afghan immigrants who have a long history of mutual language, religion, culture, benefits and a common border, and are seeking to work in Iran. In this paper, the pathology of the arrival of Afghan immigrants and the intensity of the influx of immigrants on supply forces in Iranian labor market by using the ARDL model in the period 1979-2015 shows that increased immigration through the pressure on labor supply has led to an escalation of unemployment in Iran. Based on estimation results, the pressure of immigrants on labor supply was not such that wages would suffer a significant reduction in the labor market, and there was no significant relationship between immigrants and their wages in the labor market. The high correlation between the level of minimum wages and wages, the type of occupations of Afghan immigrants (mostly unskilled), the determination of wages based on the livelihood of workers, the time and area dispersion of migrants and their different capabilities are among the main factors that affect the relationship between immigrant labor supply and wages for the period under study.