Document Type : Original Article
Authors
1 M.Sc. Department of Economics, Shiraz University, Shiraz, Iran.
2 Associate Professor, Department of Economics, Shiraz University, Shiraz, Iran
Abstract
1- Introduction:
The study examines the relationship between industrial diversity and manufacturing employment volatility in Iranian provinces. Regional employment volatility, characterized by significant fluctuations in employment levels, can lead to economic instability and high unemployment, as displaced workers struggle to find new jobs. Understanding the factors that influence employment volatility is crucial for policymakers seeking to promote regional economic stability.
2- Methodology
This paper investigates the effect of industrial diversity on manufacturing employment volatility in 27 Iranian provinces from 2001 to 2019. The authors utilize a panel data model and the System Generalized Method of Moments (GMM) estimation technique to account for the dynamic nature of employment volatility and address potential endogeneity issues.
3- Results
The findings suggest that increased industrial diversity has a negative and statistically significant effect on manufacturing employment volatility in Iranian provinces. This indicates that a more diversified industrial base can help stabilize regional employment levels and mitigate the adverse impacts of economic shocks. The results have important policy implications, as they suggest that promoting industrial diversification could be an effective strategy for reducing employment volatility and enhancing the resilience of local labor markets in Iran.
Additionally, the results show a U-shaped relationship between employment growth rates and employment volatility. The employment volatility in previous period, industrial structure change, and inflation volatility have a positive impact, while the size of factories and the ratio of employment in capital-intensive and knowledge-based industries have a negative impact on employment volatility.
4- Conclusion
The study contributes to the existing literature by providing empirical evidence on the role of industrial diversity in shaping regional employment volatility, with a focus on the understudied context of Iranian provinces. The findings offer valuable insights for policymakers and regional development planners seeking to foster more stable and resilient local economies.
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