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Employment Effects of Economic Sanctions in Iran

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  • Kelishomi, Ali Moghaddasi

    (Loughborough University)

  • Nistico, Roberto

    (University of Naples Federico II)

Abstract

This paper investigates the effect of economic sanctions on employment. We exploit the imposition of a series of unexpected and unprecedented international economic sanctions on Iran in 2012 and estimate the short-run effects of the change in import exposure on manufacturing employment at the industry level. Our estimates indicate that the sanctions led to an overall decline in the manufacturing employment growth rate by 16.4 percentage points. However, we uncover significant asymmetric effects across industries with different ex-ante import shares. Interestingly, the effects are mostly driven by labor-intensive industries and industries that heavily depend on imported inputs. This suggests that the overall negative impact of the sanctions on employment might be largely due to the decline in productivity experienced by industries with a high propensity to import inputs from abroad.

Suggested Citation

  • Kelishomi, Ali Moghaddasi & Nistico, Roberto, 2021. "Employment Effects of Economic Sanctions in Iran," IZA Discussion Papers 14814, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14814
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    4. Zubarevich, N., 2022. "Regions of Russia in the new economic realities," Journal of the New Economic Association, New Economic Association, vol. 55(3), pages 226-234.

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    More about this item

    Keywords

    import exposure; employment; economic sanctions; labor reallocation;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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