Urban Economics and Planning

Urban Economics and Planning

Economic Factors Affecting Employment in the Service Sector of Zanjan Province

Document Type : Case Study

Author
Assistant Professor, Department of Economics, Za.c., Islamic Azad University, Zanjan, Iran
Abstract
Introduction 
There are many service sectors that communicate with manufacturing sectors. The service sector has many connections to other sectors. It affects other sectors, and its constructive role in the development of the economy is undeniable. During the past decade, the service sector has attracted the attention of economists because of the increase in services in GDP and employment. Many studies predict that in the coming years, the service sector will be considered as an engine of economic growth. This is explained by the fact that there is also a positive consolidated relationship between the growing share of GDP, employment and per capita income. By examining the economic structure of the province in 2020, 11.57 % of the province’s GDP at the fixed price of 2011 is related to agriculture, hunting, forestry and fisheries, while the share of this sector in the country is 7.11 %. In other words, the average share of the agricultural sector in Zanjan province is 1.61 times the share of that sector in the country. Also, the share of provincial and national employees in the agricultural sector was 27.22 and 16.32 %, which implies that the share of workers in Zanjan province is about 1.67 times that of the country. Given the economic, social, technical and environmental characteristics of the province’s agricultural sector, most of the province’s water resources are dedicated to producing agricultural products, with about 90 % of Zanjan’s water resources being consumed in the agricultural sector, which poses many challenges. The workforce density in the agricultural sector of the province has been carried out over time, so that the service sector failed to find the necessary growth and create a positive role in the province’s development process. Confirmation of such a claim can be raised in 2022. The share of employment in the province is 41 %, which is significantly different from the country, which is 51.6 %. All of this requires the need to pay attention to the service sector in our provinces. In this study, we focus on the services of Zanjan Province and describe them in the province. We then examine the economic factors affecting the employment of this sector in the province with statistical estimates.
Materials and Methods
The main purpose of the research is to determine the economic factors affecting the employment of different sectors of Zanjan province. In this study, in accordance with the classification of the economic activities of the Iranian Statistical Center, which is based on the fourth international standards of classification of all economic activities (ISIC). provincial services to six groups of “wholesale and retail, restaurant and hotel (food and food supply),” “Transport, warehousing, postal and information and communications”, “Real estate, rental and business and veterinary services”, “Public Affairs and Urban Services Administration”, Training in Human Health Activities and Social Work” and “Other public, social, personal and domestic services”. Six different economic models have been considered in relation to the factors affecting employment in the sectors. The basis of these models is derived from the integration of theoretical foundations as well as empirical studies. Unit root test (Generalized Dickey-Fuller method) and DOLS dynamic ordinary least squares estimation have been carried out for employment in six service groups during the period 2008-2022 on a seasonal basis.
Findings
The findings of this study show that the increase in real GDP per capita in the group of public administration and urban services, education, activities related to human health and social work, and the group of other public, social, personal and household services has had a significant positive effect on employment. The variable of the ratio of industrial and agricultural productivity to the productivity of various service sectors has had a significant positive effect on employment in all groups, and the most attractive group for attracting people is the real estate, rental and business services group. The increase in women’s participation in increasing employment in all groups except the real estate, rental and business services group has had a significant positive effect. The increase in urbanization rate has increased employment in all six groups. Inflation has increased employment in all groups except the group of transportation, warehousing, post and information and communications, and it can be said that in most service groups, the cost of creating employment in the province is inflation. Employment is most affected by the increase in inflation in the group of real estate, rental and business services. The dummy variable related to Corona had a significant negative coefficient in the first four groups, so that the employment of the four groups was negatively affected by Corona, and this impact was greater in the real estate, rent and business services group. The direct effect of the unemployment rate on the employment of the public affairs and urban services group, education, activities related to human health and social work, and the group of other public, personal and household services is observed. A significant positive effect of the population over 65 years of age and under 14 years of age is observed on the employment of the public affairs and urban services group, education, activities related to human health and social work, and the group of other public, personal and household services.
Conclusion
Production is the backbone of the economy, and in a situation where the country is facing challenges such as unemployment, inflation, economic recession, and capital outflow, focusing on investment in the province’s production sector can be the driving force for development in the province. Due to the creation of a link between the service sector and the industrial sector in the province, increasing the productivity of the industrial sector leads to the prosperity of the service sector. Also, given the low productivity of the agricultural sector and the decline in the value-added share of this sector, the labor force leaving agriculture is also directed towards the service sector groups. With the increase in women’s participation in government programs and policies, there is an expectation of an increase in the share of employment in various service sectors. The participation of women in the province is higher compared to the national situation. The high percentage in the province can indicate greater participation in various areas of employment and economic businesses and an impact on employment in various service sectors in the province. It is not possible to focus and analyze the urbanization rate developments in the province in a single dimension. It is necessary to consider a set of factors in analyzing the urbanization trend including a range of economic, geographical and economic factors. Inflationary conditions that cause inflation expectations to rise have increased the incentives to provide residential and non-residential services, as well as broker services, compared to services in other sectors in the province. This has led to a greater increase in employment in this sector of services. When unemployment increases, the share of employment in public and social services, which are mainly government-owned, such as educational and health services, has increased from total employment. This is due to the increase in the share of employment in order to meet the needs of the government and society.
Keywords

Subjects


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Volume 6, Issue 3
Summer 2025
Pages 6-19

  • Receive Date 23 April 2025
  • Revise Date 23 May 2025
  • Accept Date 28 May 2025