The Systemic Model of Labor Supply in Iran: A Study with Qualitative Systems Dynamics Approach

Nazari-Nodoushan, Hamideh; Alimondegari, Maliheh; Farjadi, Gholamali; Kalantari-Banadaki,, Seyedeh Zahra; Mahinizadeh, Mansour

doi:10.22034/jpai.2023.1978028.1256

The Systemic Model of Labor Supply in Iran: A Study with Qualitative Systems Dynamics Approach

Document Type : Original Article

Authors

Hamideh Nazari-Nodoushan ¹

Maliheh Alimondegari ²

Gholamali Farjadi ³

Seyedeh Zahra Kalantari-Banadaki, ⁴

Mansour Mahinizadeh ⁵

¹ Ph.D. Candidate in Demography, Department of Social Sciences, Yazd University, Yazd, Iran.

² Associate Professor of Demography, Department of Social Sciences, Yazd University, Yazd, Iran

³ Associate Professor of Economics, Institute for Management and Planning Studies, Tehran, Iran.

⁴ Assistant Professor, Department of Statistical Methods and Population Modeling, National Institute for Population Research , Tehran, Iran

⁵ Assistant Professor, Department of Economics, Management and Accounting, Yazd University, Yazd, Iran

10.22034/jpai.2023.1978028.1256

Abstract

Abstract
Human resources is one of the most important factors of production that plays an effective role in the economic growth and development of the country. The Human Resources market is more sensitive compared to other markets; because in addition to being affected by economic factors, it is also affected by social and demographic factors. In this research, the determinants of labor supply in Iran were studied by developing a system model based on the qualitative system dynamics Approach. This method helps the policymakers to get a deep understanding of the complexities and delays in the system by seeing the different fields as interdependent. The labor force participation rate as the proportion of the working-age population of a country that is active (employed or unemployed) in the labor market is an indication of the relative supply of labor. The paper uses expert opinions and previous research to identify demographic, economic, and social factors that affect labor force participation, such as marriage, fertility, retirement, immigration, economic growth, job opportunities, human capital, and corruption. According to the results, with the increase in GDP and consequently the increase in job opportunities, the probability of finding a job increases, and foreign migrations decrease. This path, together with the increase in the retirement age and the reduction of corruption, which faces the path of economic growth with many obstacles, can lead to an increase in the labor supply.

Introduction
The labor market is complicated due to human interaction (Falihi, 2002). The age structure transition has begun in the last three decades and will continue for the next few decades (Abbasi-Shavazi, 2018). In this research, labor supply dynamics have been investigated based on economic participation rate over time. The share of labor force participation in 1956 was about 45 percent, and according to the results of the labor force survey in 2021, labor force participation reached 41.1 percent. In these years, most of the country's age distribution is the working-age population. Therefore, if macroeconomic stability is maintained, the probability of economic growth and job creation is high. It is important to note that increasing the population in working age and levels of education leads to greater economic growth and productivity. If the structural barriers of the economy cause this age population to not be appropriately used, the opportunity may even become a serious threat. Therefore, the purpose of this study is to investigate the dynamics of human force participation in the labor market by system dynamics method and appropriate planning to increase this participation optimally.

Methods and Data
By reviewing the studies in this field, it can be concluded that most previous studies have found economic and social variables to be effective on labor force participation and have paid less attention to demographic factors. Furthermore, the issue of labor supply policy and increasing economic participation is not addressed. In this paper, through conducting library studies and collecting information from the subject literature, as well as using the opinions of experts who all had numerous publications in the field of the labor market, with the approach of qualitative dynamics of systems, the conceptual model of factors affecting labor participation index as the most important index of labor supply is discussed. According to the classification of scientific research, the present study is of the type of "applied research". Moreover, in terms of the data collection method, this study is descriptive. One of the concerns of modelers in dynamic systems is validation of models. In the meantime, validation of conceptual models and qualitative dynamics of systems is more necessary (Haji Gholam Saryazdi and Manteghi, 2020: 50). Content validity was used in this study. Content validity is used to assess how well the interview questions are consistent with the content. Furthermore, the model was tested based on experts' opinions and matching with the research literature. Considering the necessity of expertise, we took into account criteria such as education, academic or organizational positions related to the job market, and experience as well as the relationship between the work and scientific background of the individual with the subject of the study.

Finding
Systems usually consist of a combination of multiple Causal loops that are connected. To understand the dynamic causes of a phenomenon and analyze the system related to that, it is necessary to determine the most important loops that bring about the behavior of the system (Mashayekhi, 2017). Table 1 is a summary of the most important loops of the research Systemic model. Positive loops are indicated by R and negative loops are indicated by B.

Conclusion and Discussion
The labor force, as one of the main foundations of production, plays a vital role in the development process of countries, and the presence of the labor force in economic activities is significant in various aspects. Therefore, the economic participation of a society depends on different demographic, social, and economic characteristics of a country. In this research, the dynamics expressed indicate that the labor force participation index is a cumulative index that is influenced by the economic, social, and demographic characteristics of a country. According to this research, one of the leverage points in the system model for increasing economic participation is the retirement age. Therefore, raising the retirement age can increase labor force participation. The job opportunity represents another leverage point of the systemic model of this research. According to underemployment and multiple jobs, the role of human resources in the growth of production is unmatched and irreplaceable, and the more capable the human force is, the better the production quality. International migration can also be considered one of the leverage points of the model that affects economic participation. The proposed system model can be used for future research based on a mathematical description of the system and operating rules.

Acknowledgments
This paper is based on the doctoral dissertation of the first author in demography, completed at the Faculty of Social Sciences of Yazd University. The authors appreciate the experts who participated in this research and the anonymous reviewers of the presnt paper for their constructive feedback.

Keywords

Labor market

Labor supply

Labor force participation rate

Qualitative system dynamics

Iran

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