International Trade and Employment in Labour-Intensive Sectors in Iran; The Case of Carpet- Weavers

Most developing countries try to “reduce production costs” to be able to increase their exports to the competitive international markets. The process of economic globalization has winners and losers. Surging international trade has lowered the share of Iran's labour-intensive exports, especially Persian Carpets, in international markets; as the production costs of its rival countries are lower. The findings of this research and the results of the survey which was conducted in Kashan show that rise in international trade has reduced Iran's competitiveness in labour intensive exports and the increased the share of resource based exports. As, harsh international competition in conquering hand-woven carpet markets has reduced real wages of carpet-weavers and has restructured the labour force of the carpet industry in Iran. The middle income families, who were involved in carpet-weaving for long time, have left the industry and Afghan immigrant workers increasingly substitute Iranian middle class weavers. The estimated econometric model also indicates that by increasing real income, many workers leave low-paid carpet weaving jobs. So, Iran's share in international hand-woven carpet markets would be lower, if low-paid women and Afghan workers were not concentrated in Iran's hand-woven carpet industry