Scoville - The Labor Market in Prerevolutionary Iran

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The Labor Market in Prerevolutionary IranAuthor(s): James G. ScovilleSource: Economic Development and Cultural Change, Vol. 34, No. 1 (Oct., 1985), pp. 143-155Published by: The University of Chicago PressStable URL: http://www.jstor.org/stable/1154068.

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The Labor Marketin PrerevolutionaryIran*

James G. ScovilleUniversity of MinnesotaIn the course of the 1960s,economic developmentanalystsbroadenedtheirconcernfromthe adequacyof supplyof appropriatelyrainedandmotivatedlabor to include a rather differentworry:whether the pro-cess of developmentwas creatingenough employment. Employmentwas, afterall, one of the mainways in which the fruits of developmentmightbe spreadto the greatbulkof the population.Thepurposeof thisarticle is to explorethe employmenteffects of development n prerevo-lutionaryIranby a review of the availabledata on labormarketdevel-opments duringthe 1970s. Were enoughjobs created to maintainap-proximatebalancein the labor market?If not, why not?Whoboretheburdenof unemployment?The Situationcirca 1970As a response to the worldwide concern about the creation of jobsduring he process of economicdevelopment,the InternationalLabourOrganisationILO)established he WorldEmploymentProgramWEP).One activity of the WEP was a series of EmploymentStrategyMis-sions to a large number of developing countries. Concern about theemployment and unemploymentwithin its own borders led Iran torequestsuch a missionduring he finalizationof its Fifth(5-year)Plan,for 1973-77.1Theirreportwill provideus with a benchmarkappraisalof the situation around 1970.The missionreport ound thatthe stateof the labor market n Iran,especially in urbanareas,was in reasonablebalance at the time. It wasgenerallyoptimisticabout most aspects of the existing laborand em-ploymentsituation.2In this vein, the report rejected implications hatcouldhave been drawnfrom(admittedlyweak)datathat, amongotherthings, suggestedthat realunskilledwages had beeneroding orseveralyears; was uncriticalof the lack of compliancewith minimumwagelegislation;wrote off any problemsrelating o the employmentof chil-drenas a ruralproblem;andignored (admittedly kimpy)evidence on

? 1985 by The University of Chicago. All rights reserved.0013-0079/86/3401-0006$1.00

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144 Economic Development and Cultural Changeplant-level industrial relations.3 However, the main body of the reportdid take notice of possible future problems in the labor market andaddressed itself to the policy changes required for all the increasedlabor force during the plan period to find jobs outside agriculture.During the Fifth Plan: The ILO Mission's ViewDuring the Fifth Plan (1973-77), the labor force of Iran was expected toincrease by some 1.4 million persons to a total of 10.6 million. To raisethe likelihood that all this increase (but no more than this increase)would be absorbed in urban employment, the report stressed a numberof key policy thrusts: to limit the implementation of capital-intensiveindustrial projects to those already begun or committed; to put addedemphasis on low capital-intensity as a criterion for evaluating futureprojects; to avoid prefabricated housing and the use of heavy ma-chinery in construction generally; to repeal the section of the laborcode relating to termination pay, which was estimated to average 208days' pay;4 and to undertake a variety of agriculturaland ruralprojectsand policies aimed at keeping labor on the land (so that the requiredabsorption of 1.4 million workers would not be raised further by migra-tion).The report estimated that adoption of these policies would pro-duce the evolution of the employment situation over the period of theFifth Plan that is shown in table 1.5 Most notable is the increase inmining and manufacturing employment by 680,000 instead of the300,000 to 400,000 that was argued to have been likely in the absence ofpro-employment policies.6 The figures in table 1 and the Fifth Plan'sprovisional investment targets allow us to derive the incremental capi-tal-labor ratios (IKLRs) implicit in the mission's thinking.7 The targetsand the resulting IKLRs are shown in table 2.There were those who had doubts about how all this hung to-gether.8 It would, for example, have taken Herculean efforts to achievean IKLR for the industrial sector equal to that implicit in the mainreport. At the time that the mission was in the country, a report wasavailable that indicated that the average cost in rials for new industrialprojects in 1970 (whether already operating by then or still under con-struction) would be well in excess of RI 1 million per job.9 This was acontinuation of a soaring IKLR that had increased sevenfold from1961-63 to 1965-67.

Moreover, one had to question what kinds of jobs these "indus-trial" jobs would be, even if they were somehow achieved. At the time,the government of Iran defined "modern" industry fairly loosely: amodern enterprise was a "mechanized unit" (definition unspecified)with 10 or more employees. All else was "traditional." In 1966(5 yearsbefore the mission), this "modern sector" had only 185,000 employ-ees, in comparison with 1,046,000 in traditional ones. Clearly, the mod-



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James G. Scoville 145TABLE 1

TENTATIVE BUDGET: LABOR FORCE AND EMPLOYED POPULATION BY MAJOR ECONOMICSECTOR, 1956-77 (Thousands)

ANNUAL TOTALS INCREASESSECTOR 1956 1966 1972 1977 1972-77Agriculture 3,326 3,774 3,800 3,800 0Oil 25 26 40 55 15Mining and manufacturing(including handicrafts) 816 1,324 1,820 2,500 680Construction 336 520 710 980 270Utilities 12 53 60 65 5Commerce 355 513 650 725 75Transport and communications 208 224 255 280 25Government services 248 474 640 780 140Banking, other services, misc. 582 650 900 1,040 140Total fully or seasonallyemployed 5,908 7,558 8,875 10,225 1,350Wholly unemployed 158 284 320 375 55Total labor force 6,066 7,842 9,195 10,600 1,405

TABLE 2INCREMENTAL CAPITAL-LABOR RATIOS BY SECTOR, 1972-77

Changes in Employment Investment TargetSector (Thousands) (RI Billions) IKLRAgriculture 0 200Oil 15 200 13,330,000Other ndustryandmanufacturing 680 450 662,000Utilities 75 210 2,800,000Other* 580 740 1,276,000Total 1,350 1,800 1,333,000

* Construction, commerce, transportation and communication, governmentservices, and banking and other private services.

ern sector (which, with its value added per employee of Ri 222,000,might create "good" jobs) could hardly absorb many of the 680,000projected new employees. Equally clearly, the preponderant "tradi-tional sector" (with its value added per worker of only Rl 24,000) mightcreate jobs, but probably not "good," well-paying jobs.'0Finally, given the enormous and growing urban-ruralincome gapand the estimates of "marginality" among the farm population-thosewho had neither land nor regular farm or nonfarm work-the possibil-ity of a major influx to the cities had to be kept in mind. Thus, in thecritique mentioned in note 8, I usually concluded with an urban labormarket balance sheet of the sort shown in table 3, with three different



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146 Economic Development and Cultural ChangeTABLE 3

PROSPECTIVE URBAN LABOR MARKET BALANCE SHEET: FIFTH PLAN (1973-77)Labor Force AbsorptionIncrease Increase(%) (%)

Scenario I: The Mission Report:Normal increase, farm population constant 50Increase in employment* ... 50Scenario II: The Mission Report, Adjusted:Normal increase, farm population constant 50Increase in employment? ... 30Scenario III: A More Likely Version:Normal increase, farm population constant 50Influx from the land 15-50Normal historical growth ... 20-25Elimination of payroll taxes ... 15Elimination of discharge payments ... 10Raise in price of capital ... 5-10Total for Scenario III 65-100 50-60

* With the new policies listed on p. 144 of text.t With he newpolicieslistedon p. 144of text but withIKLRabout21/2timesthat nthe report and a rough allowance for some nonurban jobs among the 1,350,000 jobs oftable 2.

"scenarios." The second and third scenarios suggested that the rosypicture was unlikely to be achieved, whereby increases in labor supplyand increases in labor demand would run nicely together. Instead, thepotential for emergence of substantial amounts of unemployment andunderemployment, presumably hitting migrants from the rural areasthe hardest, was underscored.In passing, let me note that the tone of caution that these latterscenarios project was not out of tune with the tenor of the mission'sreport itself. The main report expressed caution about the emergingsituation and deep concern that its recommendations be followed toavert an otherwise probable employment catastrophe." Yet the cau-tious or even ominous tone of the report and my own scenarios tendedto be offset, in the mindset of the time, by the unfortunate effect of thehighly technical exercise carried out in part C of the Report.'2 As partof its work, the mission developed a macroeconomic model for theIranian economy, which was then used to forecast employment re-quirements. The fatal sentence seems to have been the following: "Ascan be seen . . . there is generally no problem of generating enoughtotal employment .. ."'3 Although this sentence was qualified to deathin subsequent pages (e.g., by observing that supply constraints in ag-riculture could have serious negative effects, that technical assump-tions underlying the methodology may not be fulfilled, that continuedincrease in IKLRs could imply very small increases in manufacturing



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James G. Scoville 147employment, and that agribusinesses tend to displace labor from theland),'4 the initial impression seemed to have rested unmoved: jobswould not be a problem. The technical virtuosity of Methodology forMacro-economic Projections seems to have awed readers; they seemto have overlooked the gaping chasm (relatively freely confessed) be-tween the model and its empirical inputs.15What Happened in the 1970s?It is clear that Iran suffered an abundance of social ills during the1970s, well cataloged in the expanding literature on the Revolution.Thus, in one passage Hetherington emphasizes the sprawl, congestion,traffic, corruption, and failure to share decision making with experts-all of which made middle-class life unpleasant.'6 It is clear that theeducational system was a major disaster zone by itself."7 SAVAK andthe estimated 101 special agencies of "justice," the use of torture, andthe immense imperial profits from it all produced a terror and hatredof the regime that had no place to turn but upheaval.'8sAlthough allthese factors played major roles, a part of the literature, a growing one,focuses on underlying economic factors such as the failure to creategood jobs.Some of the earlier and more general evaluations of economicdevelopments in Iran have identified employment patterns. Examplesinclude contemporary conclusions that "a pool of ... underemployedand underproductive labor [is] acting as a deadweight on the fragilesystem of public services and facilities"'19 or even the more daringconclusion that Iran must strike some sort of balance between eco-nomic and social considerations, "so as to prevent the tearing of thesocial fabric. This may well be our most difficult challenge.'"'20 Suchstatements, while intriguing both for their prescience and the fact thatthey were made by important officials in the Shah's regime,21 generallyserved only to whet our appetite, since they were not accompanied bydata or analysis that would allow us to see in detail how things wereplaying out in the labor market. One would expect this analytical deficitto be remedied as time moves forward, but the most recent thor-oughgoing economic approach to the fall of the regime totally excludesthe labor market.22 If contemporary observers saw an unemploymentproblem, then it seems clear that we should address two questions:What factors served to invalidate a forecast of full-employmentgrowth, and What was the magnitude of the unemployment and under-employment effect? I appraise several key labor market factors first.1. Rise in the Incremental Capital-Labor RatioOne of the central variables in the ILO mission report, and in subse-quent evaluations of the report, was the level of capital-intensity thatIranian industry would pick. Well before the fall of the Shah, it was



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148 Economic Development and Cultural Changenoted, "The increasing trend of the economy towards capital intensiveactivities (partly induced by rapidly rising wages in industry and con-struction) has kept the total number of jobs created by the Fifth Planbelow targets."23 Similar arguments, but which are less centered onlabor cost inducements to higher capital-intensity and more on the"showcase" phenomenon, have been advanced by Pakravan.24Onlyrecently, however, have estimates appeared that attempt to quantify,no matter how crudely, the degree of increased capital-intensity duringthe Fifth Plan. These increases are dramatically chronicled in table 4,drawn from the work of Katouzian.25If the IKLR moved from about R1500,000 in 1971-72 to an aver-age of RI 1.5 million in the 6 years following the ILO mission, asappears from Katouzian's research, it is apparent that the stabilizationof capital-intensity that the mission sought was not achieved. Instead,the figures would appear to have tripled, consistent with the project-specific data referred to in note 9. Apparently, the actions proposed bythe ILO mission to limit capital-intensity were either insufficient or notput into effect. Certainly, the mission's proposal that no more capital-intensive projects receive commencement permits cannot have beenimplemented. Whether the onerous termination payment provisions ofthe Labor Code (Article 33, para. 3) were repealed is unknown, but theILO's "Legislative Series" reports no changes in the code.2. Rural-Urban MigrationThe second key element in the mission's strategy involved adoption ofvarious policies to restrain the movement of rural landless and under-employed labor into the cities. This was also the second key element ofthe scheme to fail in a substantial and dramatic fashion. Between thecensuses of 1956 and 1966, urban population rose 63%; from 1966 to1976, the rate was even slightly greater at 65%. By 1976, almost 47% ofthe country's population lived in urban areas; some 13% lived inTehran alone. This surge in urban population (at about triple the ruralrate of growth) was caused by two waves of migration-the first clearlyfueled by the push of the failure of land reform and the second appar-ently related to a perception of higher incomes and better opportunitiesin the major cities, especially Tehran.26The forces behind the second surge of rural-urbanmigration werenot, however, entirely of a "pull" nature; as Kazemi makes clear,there were st'l plenty of "push" factors, including a ruralopen unem-ployment rate of 13.9% in 1971.27 In a survey of small-village migrantsto Tehran conducted in 1977, Kazemi found that 85% of the male headsof households attributed their decisions to migrate to "unsatisfactoryemployment and inadequate income" in their villages.28 Most of themigrants already had friends and relatives in the city, and they reliedon these contacts for information about migration and subsequently forinformation about employment opportunities.29



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James G. Scoville 149TABLE 4

NET DOMESTIC INVESTMENT PER ADDITIONAL JOB,1963-78

Years RI Thousands1963-64 91.01964-65 209.71965-66 298.91966-67 174.11967-68 438.11968-69 372.41969-70 356.01970-71 334.01971-72 513.61972-731973-741974-75 1,500.001975-761976-771977-78

3. Changes in Patterns of Urban EmploymentIt is clear that there were several different phases in the state of theurban labor market in Iran, especially in Tehran. From 1963 to 1973, itwas possible for one observer to conclude that "employment was high,and the swelling population of the cities was absorbed in the industrialwork force."30 Nevertheless it seems clear that by the beginning of theFifth Plan period, the situation had already changed dramatically: "Be-tween 1956 and 1966 most of the workers leaving agriculture wereabsorbed by the industrial sector, but in the subsequent period (1966-72) a higher proportion of workers began to be absorbed by the servicesector.""31This shift, which resulted in a reduction of blue-collar industrialjob opportunities in the face of substantial rural-urbanmigration, wasmore or less contemporaneous with a severe shortage of skilled, tech-nical, and professional workers. "By mid-1975, ... shortages of skilledmanpower in most industries and occupations were beginning to pose aserious constraint on growth."32 Traditional industries were losingskilled workers to higher-paying industrial jobs,33 and other observerscalled for implementation of policies to remove the shortages.34 In asomewhat ironic twist, it seems that emigration of skilled and educatedlabor to the United States constituted a substantial problem by itself.35These bottleneck shortages of skilled and educated labor had twomajor effects: first, a direct reduction in the rate of economic growthdue to the supply constaint36 and second, a major wage boom,37 whichitself in turn may have further reduced the rate of economic growth.38Some idea of the evolution of evels of employment by industry can begained from an examination of table 5. Even though these two sets of



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150 Economic Development and Cultural Changefigures are not comparable (i.e., one is on an International StandardIndustrial Classification [ISIC] basis; the other is not) and one is acensus, the other a sample, the trends in the data are striking enoughthat I suspect that my conclusions are fairly robust. Instead of thestrong expansion in mining and manufacturing employment projectedby the mission in 1972-an increase of 680,000 by 1977-there is onlyabout half that (338,000). (This figure is squarely in the 300,000-400,000 range of projected employment growth absent employmentpromotion policies that the ILO mission forecast.) Instead, employ-ment growth is strongest in construction (667,000) and all combinedservices (740,000). This phenomenon has been noted by a number ofwriters,39 and a theory of the "petrolic economy" has been builtaround it by Katouzian.40 What is especially significant about this pat-tern of growth is the foundation it laid for the next labor market phase.When the world recession hit oil markets and the Iranian governmentmoved to slow down development (in part because of high rates ofinflation), these two sectors suffered dramatically.The Result: Increasing Urban UnemploymentMost accounts of the economic backdrop to the Revolution indicatethat-while there may have been severe shortages of skilled, educated,professional, or technical workers-there also existed substantial un-employment among the unskilled. Some references are general in na-ture, observing only that there was growing unemployment of the un-skilled.41 Other observers are much more specific and emphasize theconcentration of such unemployment among the new migrants to thecities. Thus, referring to the period from spring to fall 1977 (whenthe government's development retrenchments were having a signifi-cant impact), Stempel writes, "Unskilled peasants who had migratedto the cities were unable to get work or thrown off the jobs they hadmanaged to find."'42 Similarly, Amuzegar refers to "the rapid influx ofunskilled and uneducated rural folk in the cities [that] has created adisguised work force for the time being."43 The impact of unemploy-ment on the "unskilled peasants and rural folk" may have been exacer-bated by the apparent facts that rural-urbanmigrants were in fact bet-ter educated than the rural average andfar better educated than theirfathers.44Thus we find not only a crushing of expectations but a lack ofpayoff to two forms of human capital investment (education and migra-tion) among "the urban unemployed finding only poverty after comingto the cities to seek their fortunes."'45What, if anything, can we say about aggregate numbers of theunemployed or underemployed? We have already seen an official fig-ure (in table 5) of those "seeking their first job" in 1976-approxi-mately 300,000 persons. The Plan and Budget Organization estimated(after the Revolution) that total unemployment in that year was



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JamesG. Scoville 151TABLE5

EMPLOYMENT Y INDUSTRY:1972, 1976Industry 1972 N % ISIC Industry 1976 N %Agriculture, forestry, 3,699,000 47.8 1. Agriculture, etc. 3,615,314 36.9fishingMining and quarrying 15,000 .2 2. Mining, etc. 90,230 .9Manufacturing 1,420,000 18.4 3. Manufacturing 1,682,188 17.2Construction 535,000 6.9 4. Construction 1,202,061 12.3Electricity, gas, water 47,000 .6 5. Electricity, etc. 61,761 .6Commerce 717,000 9.3 6. Trade (wholesale 671,735 6.9and retail) hotels

and restaurantsTransport, storage, 296,000 3.8 7. Transport, etc. 433,364 4.4communicationsServices 885,000 11.5 8. Finance, insurance, 100,653 1.0real estate, businessservicesNot adequately de- 22,000 .3 9. Community, social, 1,523,688 15.6scribed personal servicesUnemployed 89,000 1.2 10. Not adequately de- 117,071 1.2scribed

-. Seeking first job 297,990 3.0SOURCES.-1972:International Labour Office, Yearbookof Labour Statistics (1978),table 2A; 1976: Yearbook of Labour Statistics (1982), table 2A.

996,639.46 In the following year, Katouziancites an officialreportofthe Bank Markazithat would indicatethatopen, officiallyrecognizedunemploymenthad remainedat about that level. Thus, the bank re-ported that of 9.9 million "potentialemployees" in Iranin 1977-78,only nine million were employed, that is, 900,000were unemployed.47To these numberswould have to be added the ranksof the virtuallyunemployed: at about the same time (mid-1978?),"a governmentministerrecentlystatedthat about700,000peoplein the Iranian apitallive from 'unproductive work, such as peddling chewing gum.' "48Even allowing for some possible statistical overlap between theofficially unemployed and the unproductively employed, it is clear thatthere must have been several million such persons concentrated inIran's cities in 1978.It appears that the situation continued to deteriorate during 1979.Depending on the assumptions made, the postrevolutionary Plan andBudget Organization estimated nationwide unemployment in 1980 be-tween 2,333,599 and 2,649,494.49 This would represent an unemploy-ment rate of 20.3%-23.1%. At about the same time, the EconomistIntelligence Unit reported, "The scale of economic recession in Iran isconsiderable .... As much as 40% of the labor force could be unem-ployed when commercial life resumes." This estimate of more thanfour million unemployed would also include those thrown out of work



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152 Economic Development and Cultural ChangeTABLE 6

ANNUAL CHANGE IN REAL WAGES, MANUFACTURING, AND CONSTRUCTION (%)Large UnskilledSelected Manufacturing ConstructionYear Manufacturing Enterprises Construction Bricklayers Labor

1971 5.0 ... -2.01972 8.6 ... 10.21973 6.1 ... 9.31974 6.6 ... 11.91975 23.3 31.0 34.1 32.0 37.01976 10.1 16.8 19.2 21.2 16.11977 ... 2.6 ... 8.1 6.91978 ... 17.8 ... 8.7 4.71979 . . . 45.4 ... 1.6 9.61980 ... -4.5 ... -7.9 3.1

SoURcEs.--Selected manufacturing and construction: Economic Bulletin for Asiaand the Pacific (1978), table 7. Large manufacturing enterprises, bricklayers, andunskilled construction labor: Bank Markazi Iran Economic Report and Balance Sheet1980 (Tehran, 1982), pp. 123, 132, 172.

in the modern sector through economic chaos and disruption of sup-plies.50The Impacts on Wages and IncomesData on wages are very limited and of questionable meaning. The mostrecent series available suggest that the labor market stringencies of themid-1970s were accompanied by a sizable boom in wages, which sub-sequently collapsed. Table 6 shows the evolution of real wages in"selected manufacturing industries" (meaning of the term is unclear;data are from the Plan and Budget Organization), in construction (fromthe Bank Markazi) from 1970 to 1976, and in "large manufacturingenterprises" (undefined) and two construction organizations from 1974to 1980.

From this table, it would appear that those who had jobs weregaining in terms of living standards in all the years before the Revolu-tion. The rapid wage gains of 1975 and 1976 were followed by muchlower increases, however; for construction, this fall-off lasted for therest of the decade.In spite of the increase in real wages during the decade, anotherstrong trend was equally apparent at the time: the distribution of allincomes not only was very unequal by the standards of other devel-oping countries but was becoming more unequal.5'Tying It All TogetherBy the late 1970s, the urban labor market was a shambles. Unskilledmigrants had been pouring into the cities, especially Tehran; manufac-



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James G. Scoville 153turing jobs had failed totally to keep pace; the number of unemployedand underemployed had soared. Several million unemployed andgrossly underemployed, many of whom were recent migrants, wereroaming the streets of Iran's cities. In such a context, the world reces-sion and changing development policy had disastrous effects. In thewords of one observer, "The construction industry, which employedmany of the unskilled village immigrants, was particularly hard hit [bythe mid-1970s recession and government development cutbacks]. [In1977] wages declined as much as 30 percent for such workers."52 Addto this situation a fairly strong historical tendency for economic prob-lems (e.g., a rise in the price index) to be followed by unrest in Iran,53and the economic stage was set for the Iranian Revolution.Notes* Research assistance by Kirsten Ingersonis gratefullyacknowledged;she is also exculpatedfromany errorsin this article. Useful comments wereprovidedby several reviewers of thisjournal.1. The mission,chairedby EtienneHirsch,was in Iranat the end of 1971and the beginningof 1972. I was a memberof the mission.2. International Labour Office, Employment and Income Policies for Iran(Geneva: ILO, 1972).3. Ibid., app. F, pp. 7, 96 (but also see p. 94 for an indicationthat aproblemwith minimumwage enforcementmay exist), pp. 102, 100.4. Ibid., p. 98.5. Ibid., p. 32.6. Ibid., p. 20.7. Ibid., p. 31. The IKLRshows the additional apitalassociatedwith thecreation of one newjob and is estimatedby dividing ndustry-specificnvest-menttargets by the correspondingncreasesin employment.8. I includemyself in this group. Duringthe summerand fall of 1972,Ipresenteda critiqueof the mission's arithmetic containingsome of the re-marksbelow)at the Universitiesof Illinois, Cincinnati,andMichiganState andat the U.S. Departmentof Labor's InternationalManpowerInstitute. I alsodiscussed some reservationswith Abdol-MajidMajidi,ministerof labor,dur-ing an unrelatedresearchsojourn n Tehranduring he summerof 1972.9. Ministryof Economy,Bureauof Statistics,Commencement nd Oper-ation Permits for Industrial Establishments in 1969 (Tehran, n.d.), p. 2.10. William H. Bartsch, Problems of Employment Creation in Iran(Geneva:ILO, 1970),p. 13.At thattime, the exchangerate was approximately70 rials = $1.11. ILO, Employment and Incomes Policies for Iran, p. 20.

12. Methodology for Macro-economic Projections, ILO, Employmentand Incomes Policies for Iran, pt. C.13. Ibid., p. 117.14. Ibid., pp. 118, 127, 128.15. Whether t was sensible,under hese circumstances, o invest so muchof the mission's capitalin the Methodologyremainsan open question.16. Norriss S. Hetherington,"Industrialization nd Revolution in Iran:Forced Progress or Unmet Expectation?" Middle East Journal (Summer1982),pp. 362-77, esp. p. 362.17. Ibid., pp. 369-70.



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154 Economic Development and Cultural Change18. ArnoldHottinger,"TheBackground f the IranianUpheaval,"SwissReview of WorldAffairs (March 1979), pp. 14-15.19. JanhangirAmuzegar,Iran:An EconomicProfile(Washington,D.C.:Middle East Institute, 1977),p. 251.20. Abdol-MajidMajidi,"Iran,1980-85:ProblemsandChallengesof De-velopment," WorldToday(London)(July 1977),pp. 267-74, esp. p. 271.21. Amuzegarhad held ministerialposts and was to becomeprimeminis-ter;Majidiwas head of the PlanandBudgetOrganizationn 1977and hadbeenministerof laborand social affairsduring he ILO mission.22. Robert E. Looney, Economic Origins of the Iranian Revolution (NewYork:PergamonPress, 1982).23. Amuzegar,p. 252.24. KarimPakravan,"Government ntervention n the Industryof Iran,1964-78"(workingpaperat the HooverInstitution,StanfordUniversity, July1981).25. Homa Katouzian, Political Economy of Modern Iran (New York:New YorkUniversityPress, 1981),p. 267. The figures n table4 were derivedby Katouzian from Bank Markazireports;the numerator s "net domesticfixedcapitalformation,"and the denominator s "changein the laborforce."Use of "labor force" instead of "employment" will tend to understateIKLR-if the unemployment ate was growing,rises in IKLR will be under-stated.Nevertheless, Katouzian'sfigures or the wholeeconomydo not seeminconsistent with the roughestimates for the industrial ector based on com-mencementpermits(see n. 9).26. ShahpurGudarzi-Nejad,"A New Phase in the Evolutionof UrbanCenters in Iran," Durham University Journal (December 1977), pp. 54-57. Fora more extensive review of the impactof land reform,see FarhadKazemi,Revolution and Poverty in Iran (New York: New York University Press, 1980),pp. 34-41.27. Kazemi,p. 42.28. Ibid., p. 44.29. Ibid., pp. 44-45.30. RichardCottam, "Goodbye to American'sShah," Foreign Policy

(Spring1979),pp. 3-14, esp. p. 8.31. Robert E. Looney, A Development Strategy for Iran through the1980s(New York:PraegerPublishers,1977),p. 39.32. Ibid., p. 42.33. Rodney Wilson, "Industry Feels the Squeeze from High WageLabour," Middle East Economic Digest (June 30, 1978), pp. 10-11.34. MahmoodYousefi, "The IranianManpowerShortageProblem:ANote," Malayan Economic Review (April 1978), pp. 49-53.35. Hossein Askari, John T. Cummings,and MehmetIzbudak,"Iran'sMigrationof Skilled Labor to the United States," Iranian Studies (Winter-Spring1977),pp. 3-35.36. Looney, A Development Strategy, pp. 40-45; Kooros Maskooki,"Impactof LaborScarcityon Iran's EconomicDevelopment:A ProgrammingModel" (Ph.D. diss., Universityof Nebraskaat Lincoln, 1977).37. Looney, A Development Strategy, pp. 45-46.38. Amuzegar n. 19above), p. 252.39. Only60,000-70,000of the 300,000new entrantsto the labormarketwere being absorbed in industry(RichardF. Nyrop, ed., Iran: A CountryStudy [Washington,D.C.: AmericanUniversity,1978],p. 81). "Theindustrialsector was able to play a dynamic role . . . only because rapid growth indemand for construction workers offset the relatively poor performance n



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James G. Scoville 155manufacturing"SamuelS. Liberman,"ProspectsforDevelopmentandPopu-lation Growth in Iran," Population and Development Review [June 1979], pp.293-317, esp. p. 305).40. Katouzian(n. 25 above).41. Looney, A Development Strategy (n. 31 above), p. 44.42. John D. Stempel, Inside the Iranian Revolution (Bloomington: In-dianaUniversityPress, 1981),p. 81.43. Amuzegar n. 19above), p. 252.44. Kazemi(n. 26 above), p. 44.45. Stempel, p. 81.46. Plan and Budget Organization, Employment and Unemployment inIran,1976-1980(Tehran:PlanandBudgetOrganization, 982),p. 26(availableonly in Persian).47. Katouzian(n. 25 above), p. 259.48. ArnoldHottinger,"Tehran:Portraitof a TroubledCity," Swiss Re-view of WorldAffairs (October 1978), pp. 27-29.49. Plan and Budget Organization,p. 54.50. Quarterly Economic Review of Iran (February 26, 1979), p. 12.51. See Looney, A DevelopmentStrategy(n. 31 above), pp. 46-51, for ageneraldiscussion.Forgreaterdetail,see AhmadJabbari,"EconomicFactorsin Iran'sRevolution:Poverty,Inequality,andInflation," n Iran:Essays on aRevolution, ed. Ahmad Jabbariand Robert Olson (Lexington, Ky.: MazdaPublishers,1981).

52. Barry M. Rubin, Paved with Good Intentions: The American Experi-ence and Iran(New York:OxfordUniversityPress, 1980),p. 270.53. FarhadKazemi,"Economic IndicatorsandPoliticalViolence in Iran:1946-1968,"Iranian Studies (Winter-Spring1975),pp. 70-86.

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Scoville - The Labor Market in Prerevolutionary Iran

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