The Labor Market in Prerevolutionary Iran Author(s): James G. Scoville Source: Economic Development and Cultural Change, Vol.

34, No. 1 (Oct., 1985), pp. 143-155 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/1154068 . Accessed: 03/02/2014 17:03
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The Labor Market in PrerevolutionaryIran*

James G. Scoville
University of Minnesota

In the course of the 1960s, economic developmentanalysts broadened theirconcern from the adequacyof supplyof appropriately trainedand motivated labor to include a ratherdifferentworry: whether the process of development was creating enough employment. Employment was, after all, one of the main ways in which the fruitsof development mightbe spreadto the greatbulkof the population.The purposeof this articleis to explore the employmenteffects of developmentin prerevolutionaryIranby a review of the availabledata on labormarketdevelopments duringthe 1970s. Were enoughjobs created to maintainapproximatebalance in the labor market?If not, why not? Who bore the burdenof unemployment? The Situationcirca 1970 As a response to the worldwide concern about the creation of jobs Labour duringthe process of economic development,the International established the World (ILO) (WEP). Organisation Program Employment One activity of the WEP was a series of EmploymentStrategy Missions to a large number of developing countries. Concern about the employment and unemploymentwithin its own borders led Iran to request such a mission duringthe finalizationof its Fifth (5-year)Plan, for 1973-77.1Their report will provide us with a benchmarkappraisal of the situation around 1970. The mission reportfound that the state of the labormarketin Iran, especially in urbanareas, was in reasonablebalanceat the time. It was generally optimistic about most aspects of the existing labor and employment situation.2In this vein, the reportrejected implicationsthat could have been drawnfrom (admittedlyweak) data that, amongother things, suggestedthat real unskilledwages had been erodingfor several years; was uncritical of the lack of compliance with minimumwage legislation;wrote off any problemsrelatingto the employmentof children as a ruralproblem;and ignored(admittedlyskimpy)evidence on
? 1985 by The University of Chicago. All rights reserved. 0013-0079/86/3401-0006$1.00

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plant-level industrial relations.3 However, the main body of the report did take notice of possible future problems in the labor market and addressed itself to the policy changes required for all the increased labor force during the plan period to find jobs outside agriculture. During the Fifth Plan: The ILO Mission's View During the Fifth Plan (1973-77), the labor force of Iran was expected to increase by some 1.4 million persons to a total of 10.6 million. To raise the likelihood that all this increase (but no more than this increase) would be absorbed in urban employment, the report stressed a number of key policy thrusts: to limit the implementation of capital-intensive industrial projects to those already begun or committed; to put added emphasis on low capital-intensity as a criterion for evaluating future projects; to avoid prefabricated housing and the use of heavy machinery in construction generally; to repeal the section of the labor code relating to termination pay, which was estimated to average 208 days' pay;4 and to undertake a variety of agricultural and rural projects and policies aimed at keeping labor on the land (so that the required absorption of 1.4 million workers would not be raised further by migration). The report estimated that adoption of these policies would produce the evolution of the employment situation over the period of the Fifth Plan that is shown in table 1.5 Most notable is the increase in mining and manufacturing employment by 680,000 instead of the 300,000 to 400,000 that was argued to have been likely in the absence of pro-employment policies.6 The figures in table 1 and the Fifth Plan's provisional investment targets allow us to derive the incremental capital-labor ratios (IKLRs) implicit in the mission's thinking.7 The targets and the resulting IKLRs are shown in table 2. There were those who had doubts about how all this hung together.8 It would, for example, have taken Herculean efforts to achieve an IKLR for the industrial sector equal to that implicit in the main report. At the time that the mission was in the country, a report was available that indicated that the average cost in rials for new industrial projects in 1970 (whether already operating by then or still under construction) would be well in excess of RI 1 million per job.9 This was a continuation of a soaring IKLR that had increased sevenfold from 1961-63 to 1965-67. Moreover, one had to question what kinds of jobs these "industrial" jobs would be, even if they were somehow achieved. At the time, the government of Iran defined "modern" industry fairly loosely: a modern enterprise was a "mechanized unit" (definition unspecified) with 10 or more employees. All else was "traditional." In 1966 (5 years before the mission), this "modern sector" had only 185,000 employees, in comparison with 1,046,000 in traditional ones. Clearly, the mod-

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James G. Scoville
TABLE 1

145

TENTATIVE BUDGET: LABOR FORCE AND EMPLOYED POPULATION BY MAJOR ECONOMIC SECTOR, 1956-77

(Thousands)
ANNUAL TOTALS INCREASES

SECTOR

1956

1966

1972

1977

1972-77

Agriculture Oil Mining and manufacturing (including handicrafts) Construction Utilities Commerce Transport and communications Government services Banking, other services, misc. Total fully or seasonally employed Wholly unemployed Total labor force

3,326 25 816 336 12 355 208 248 582 5,908 158 6,066

3,774 26 1,324 520 53 513 224 474 650 7,558 284 7,842

3,800 40 1,820 710 60 650 255 640 900 8,875 320 9,195

3,800 55 2,500 980 65 725 280 780 1,040 10,225 375 10,600

0 15 680 270 5 75 25 140 140 1,350 55 1,405

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

Sector

Changes in Employment (Thousands)

Investment Target (RI Billions)

IKLR

Agriculture Oil Otherindustryand manufacturing Utilities Other* Total

0 15 680 75 580 1,350

200 200 450 210 740 1,800

13,330,000 662,000 2,800,000 1,276,000 1,333,000

government

* Construction, commerce, transportation and communication, services, 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 680,000 projected new employees. Equally clearly, the preponderant "traditional sector" (with its value added per worker of only Rl 24,000) might create jobs, but probably not "good," well-paying jobs.'0 Finally, given the enormous and growing urban-rural income gap and the estimates of "marginality" among the farm population-those who had neither land nor regular farm or nonfarm work-the possibility of a major influx to the cities had to be kept in mind. Thus, in the critique mentioned in note 8, I usually concluded with an urban labor market balance sheet of the sort shown in table 3, with three different

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TABLE 3
PROSPECTIVE URBAN LABOR MARKET BALANCE SHEET: FIFTH PLAN (1973-77)

Labor Force Increase (%) Scenario I: The Mission Report: Normal increase, farm population constant Increase in employment* Scenario II: The Mission Report, Adjusted: Normal increase, farm population constant Increase in employment? Scenario III: A More Likely Version: Normal increase, farm population constant Influx from the land Normal historical growth Elimination of payroll taxes Elimination of discharge payments Raise in price of capital Total for Scenario III * With the new policies listed on p. 144 of text. 50 ... 50 ... 50 15-50 ... ... ... ... 65-100

Absorption Increase (%)

50 30

20-25 15 10 5-10 50-60

the report and a rough allowance for some nonurban jobs among the 1,350,000 jobs of table 2.

t Withthe new policies listed on p. 144of text but with IKLRabout21/2timesthatin

"scenarios." The second and third scenarios suggested that the rosy picture was unlikely to be achieved, whereby increases in labor supply and increases in labor demand would run nicely together. Instead, the potential for emergence of substantial amounts of unemployment and underemployment, presumably hitting migrants from the rural areas the hardest, was underscored. In passing, let me note that the tone of caution that these latter scenarios project was not out of tune with the tenor of the mission's report itself. The main report expressed caution about the emerging situation and deep concern that its recommendations be followed to avert an otherwise probable employment catastrophe." Yet the cautious or even ominous tone of the report and my own scenarios tended to be offset, in the mindset of the time, by the unfortunate effect of the highly technical exercise carried out in part C of the Report.'2 As part of its work, the mission developed a macroeconomic model for the Iranian economy, which was then used to forecast employment requirements. The fatal sentence seems to have been the following: "As can be seen . . . there is generally no problem of generating enough total employment .. ."'3 Although this sentence was qualified to death in subsequent pages (e.g., by observing that supply constraints in agriculture could have serious negative effects, that technical assumptions underlying the methodology may not be fulfilled, that continued increase in IKLRs could imply very small increases in manufacturing

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James G. Scoville

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employment, and that agribusinesses tend to displace labor from the land),'4 the initial impression seemed to have rested unmoved: jobs would not be a problem. The technical virtuosity of Methodology for Macro-economic Projections seems to have awed readers; they seem to have overlooked the gaping chasm (relatively freely confessed) between the model and its empirical inputs.15 What Happened in the 1970s? It is clear that Iran suffered an abundance of social ills during the 1970s, 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 expertsall of which made middle-class life unpleasant.'6 It is clear that the educational system was a major disaster zone by itself."7 SAVAK and the estimated 101 special agencies of "justice," the use of torture, and the immense imperial profits from it all produced a terror and hatred of the regime that had no place to turn but upheaval.'8s Although all these factors played major roles, a part of the literature, a growing one, focuses on underlying economic factors such as the failure to create good jobs. Some of the earlier and more general evaluations of economic developments in Iran have identified employment patterns. Examples include contemporary conclusions that "a pool of ... underemployed and underproductive labor [is] acting as a deadweight on the fragile system of public services and facilities"'19 or even the more daring conclusion that Iran must strike some sort of balance between economic and social considerations, "so as to prevent the tearing of the social fabric. This may well be our most difficult challenge.'"'20 Such statements, while intriguing both for their prescience and the fact that they were made by important officials in the Shah's regime,21 generally served only to whet our appetite, since they were not accompanied by data or analysis that would allow us to see in detail how things were playing out in the labor market. One would expect this analytical deficit to be remedied as time moves forward, but the most recent thoroughgoing economic approach to the fall of the regime totally excludes the labor market.22 If contemporary observers saw an unemployment problem, then it seems clear that we should address two questions: What factors served to invalidate a forecast of full-employment growth, and What was the magnitude of the unemployment and underemployment effect? I appraise several key labor market factors first. 1. Rise in the Incremental Capital-Labor Ratio One of the central variables in the ILO mission report, and in subsequent evaluations of the report, was the level of capital-intensity that Iranian industry would pick. Well before the fall of the Shah, it was

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noted, "The increasing trend of the economy towards capital intensive activities (partly induced by rapidly rising wages in industry and construction) has kept the total number of jobs created by the Fifth Plan below targets."23 Similar arguments, but which are less centered on labor cost inducements to higher capital-intensity and more on the "showcase" phenomenon, have been advanced by Pakravan.24 Only recently, however, have estimates appeared that attempt to quantify, no matter how crudely, the degree of increased capital-intensity during the Fifth Plan. These increases are dramatically chronicled in table 4, drawn from the work of Katouzian.25 If the IKLR moved from about R1 500,000 in 1971-72 to an averof age RI 1.5 million in the 6 years following the ILO mission, as appears from Katouzian's research, it is apparent that the stabilization of capital-intensity that the mission sought was not achieved. Instead, the figures would appear to have tripled, consistent with the projectspecific data referred to in note 9. Apparently, the actions proposed by the ILO mission to limit capital-intensity were either insufficient or not put into effect. Certainly, the mission's proposal that no more capitalintensive projects receive commencement permits cannot have been implemented. Whether the onerous termination payment provisions of the Labor Code (Article 33, para. 3) were repealed is unknown, but the ILO's "Legislative Series" reports no changes in the code. 2. Rural-Urban Migration The second key element in the mission's strategy involved adoption of various policies to restrain the movement of rural landless and underemployed labor into the cities. This was also the second key element of the scheme to fail in a substantial and dramatic fashion. Between the censuses of 1956 and 1966, urban population rose 63%; from 1966 to 1976, the rate was even slightly greater at 65%. By 1976, almost 47% of the country's population lived in urban areas; some 13% lived in Tehran alone. This surge in urban population (at about triple the rural rate of growth) was caused by two waves of migration-the first clearly fueled by the push of the failure of land reform and the second apparently related to a perception of higher incomes and better opportunities in the major cities, especially Tehran.26 The forces behind the second surge of rural-urban migration were not, however, entirely of a "pull" nature; as Kazemi makes clear, there were st'l plenty of "push" factors, including a rural open unemployment rate of 13.9% in 1971.27 In a survey of small-village migrants to Tehran conducted in 1977, Kazemi found that 85% of the male heads of households attributed their decisions to migrate to "unsatisfactory employment and inadequate income" in their villages.28 Most of the migrants already had friends and relatives in the city, and they relied on these contacts for information about migration and subsequently for information about employment opportunities.29

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James G. Scoville
TABLE 4
NET DOMESTIC INVESTMENT PER ADDITIONAL JOB,

149

1963-78
Years 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 RI Thousands 91.0 209.7 298.9 174.1 438.1 372.4 356.0 334.0 513.6

1,500.00

3. Changes in Patterns of Urban Employment It is clear that there were several different phases in the state of the urban labor market in Iran, especially in Tehran. From 1963 to 1973, it was possible for one observer to conclude that "employment was high, and the swelling population of the cities was absorbed in the industrial work force."30 Nevertheless it seems clear that by the beginning of the Fifth Plan period, the situation had already changed dramatically: "Between 1956 and 1966 most of the workers leaving agriculture were absorbed by the industrial sector, but in the subsequent period (196672) a higher proportion of workers began to be absorbed by the service
sector.""31

This shift, which resulted in a reduction of blue-collar industrial job opportunities in the face of substantial rural-urban migration, was more or less contemporaneous with a severe shortage of skilled, technical, and professional workers. "By mid-1975, ... shortages of skilled manpower in most industries and occupations were beginning to pose a serious constraint on growth."32 Traditional industries were losing skilled workers to higher-paying industrial jobs,33 and other observers called for implementation of policies to remove the shortages.34 In a somewhat ironic twist, it seems that emigration of skilled and educated labor to the United States constituted a substantial problem by itself.35 These bottleneck shortages of skilled and educated labor had two major effects: first, a direct reduction in the rate of economic growth due to the supply constaint36 and second, a major wage boom,37 which itself in turn may have further reduced the rate of economic growth.38 Some idea of the evolution of !evels of employment by industry can be gained from an examination of table 5. Even though these two sets of

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figures are not comparable (i.e., one is on an International Standard Industrial Classification [ISIC] basis; the other is not) and one is a census, the other a sample, the trends in the data are striking enough that I suspect that my conclusions are fairly robust. Instead of the strong expansion in mining and manufacturing employment projected by the mission in 1972-an increase of 680,000 by 1977-there is only about half that (338,000). (This figure is squarely in the 300,000400,000 range of projected employment growth absent employment promotion policies that the ILO mission forecast.) Instead, employment growth is strongest in construction (667,000) and all combined services (740,000). This phenomenon has been noted by a number of writers,39 and a theory of the "petrolic economy" has been built around it by Katouzian.40 What is especially significant about this pattern of growth is the foundation it laid for the next labor market phase. When the world recession hit oil markets and the Iranian government moved to slow down development (in part because of high rates of inflation), these two sectors suffered dramatically. The Result: Increasing Urban Unemployment Most accounts of the economic backdrop to the Revolution indicate that-while there may have been severe shortages of skilled, educated, professional, or technical workers-there also existed substantial unemployment among the unskilled. Some references are general in nature, observing only that there was growing unemployment of the unskilled.41 Other observers are much more specific and emphasize the concentration of such unemployment among the new migrants to the cities. Thus, referring to the period from spring to fall 1977 (when the government's development retrenchments were having a significant impact), Stempel writes, "Unskilled peasants who had migrated to the cities were unable to get work or thrown off the jobs they had managed to find."'42 Similarly, Amuzegar refers to "the rapid influx of unskilled and uneducated rural folk in the cities [that] has created a disguised work force for the time being."43 The impact of unemployment on the "unskilled peasants and rural folk" may have been exacerbated by the apparent facts that rural-urban migrants were in fact better educated than the rural average and far better educated than their fathers.44 Thus we find not only a crushing of expectations but a lack of payoff to two forms of human capital investment (education and migration) among "the urban unemployed finding only poverty after coming to the cities to seek their fortunes."'45 What, if anything, can we say about aggregate numbers of the unemployed or underemployed? We have already seen an official figure (in table 5) of those "seeking their first job" in 1976-approximately 300,000 persons. The Plan and Budget Organization estimated (after the Revolution) that total unemployment in that year was

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James G. Scoville
TABLE 5
BY INDUSTRY:1972, 1976 EMPLOYMENT

151

Industry

1972 N

ISIC Industry 1. Agriculture, etc. 2. 3. 4. 5. 6. Mining, etc. Manufacturing Construction Electricity, etc. Trade (wholesale and retail) hotels and restaurants 7. Transport, etc.

1976 N 3,615,314 90,230 1,682,188 1,202,061 61,761 671,735

% 36.9 .9 17.2 12.3 .6 6.9

3,699,000 47.8 Agriculture, forestry, fishing .2 15,000 Mining and quarrying 1,420,000 18.4 Manufacturing 6.9 535,000 Construction .6 47,000 Electricity, gas, water 9.3 717,000 Commerce 3.8 11.5

Transport, storage, communications Services

296,000 885,000

433,364 100,653

4.4 1.0

Not adequately described Unemployed

22,000 89,000

.3 1.2

8. Finance, insurance, real estate, business services 9. Community, social, personal services 10. Not adequately described -. Seeking first job

1,523,688 117,071 297,990

15.6 1.2 3.0

SOURCES.-1972:International Labour Office, Yearbook of Labour Statistics (1978), table 2A; 1976: Yearbook of Labour Statistics (1982), table 2A.

996,639.46 In the following year, Katouzian cites an official report of

the Bank Markazithat would indicate that open, officiallyrecognized unemploymenthad remainedat about that level. Thus, the bank reported that of 9.9 million "potential employees" in Iran in 1977-78, only nine millionwere employed, that is, 900,000were unemployed.47 To these numberswould have to be added the ranks of the virtually unemployed: at about the same time (mid-1978?), "a government ministerrecently stated that about 700,000people in the Iraniancapital
live from 'unproductive work, such as peddling chewing gum.' "48 Even allowing for some possible statistical overlap between the officially unemployed and the unproductively employed, it is clear that there must have been several million such persons concentrated in Iran's cities in 1978. It appears that the situation continued to deteriorate during 1979. Depending on the assumptions made, the postrevolutionary Plan and Budget Organization estimated nationwide unemployment in 1980 between 2,333,599 and 2,649,494.49 This would represent an unemployment rate of 20.3%-23.1%. At about the same time, the Economist Intelligence Unit reported, "The scale of economic recession in Iran is considerable .... As much as 40% of the labor force could be unemployed when commercial life resumes." This estimate of more than four million unemployed would also include those thrown out of work

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TABLE 6
ANNUAL CHANGE IN REAL WAGES, MANUFACTURING, AND CONSTRUCTION (%)

Year 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

Selected Manufacturing 5.0 8.6 6.1 6.6 23.3 10.1 ... ... ... ...

Large Manufacturing Enterprises ... ... ... ... 31.0 16.8 2.6 17.8 45.4 -4.5

Construction -2.0 10.2 9.3 11.9 34.1 19.2 ... ... ... ...

Bricklayers

Unskilled Construction Labor

32.0 21.2 8.1 8.7 1.6 -7.9

37.0 16.1 6.9 4.7 9.6 3.1

SoURcEs.--Selected manufacturing and construction: Economic Bulletin for Asia and the Pacific (1978), table 7. Large manufacturing enterprises, bricklayers, and unskilled construction labor: Bank Markazi Iran Economic Report and Balance Sheet 1980 (Tehran, 1982), pp. 123, 132, 172.

in the modern sector through economic chaos and disruption of supplies.50 The Impacts on Wages and Incomes Data on wages are very limited and of questionable meaning. The most recent series available suggest that the labor market stringencies of the mid-1970s were accompanied by a sizable boom in wages, which subsequently 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 (from the Bank Markazi) from 1970 to 1976, and in "large manufacturing enterprises" (undefined) and two construction organizations from 1974 to 1980. From this table, it would appear that those who had jobs were gaining in terms of living standards in all the years before the Revolution. The rapid wage gains of 1975 and 1976 were followed by much lower increases, however; for construction, this fall-off lasted for the rest of the decade. In spite of the increase in real wages during the decade, another strong trend was equally apparent at the time: the distribution of all incomes not only was very unequal by the standards of other developing countries but was becoming more unequal.5' Tying It All Together By the late 1970s, the urban labor market was a shambles. Unskilled migrants had been pouring into the cities, especially Tehran; manufac-

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turing jobs had failed totally to keep pace; the number of unemployed and underemployed had soared. Several million unemployed and grossly underemployed, many of whom were recent migrants, were roaming the streets of Iran's cities. In such a context, the world recession and changing development policy had disastrous effects. In the words of one observer, "The construction industry, which employed many of the unskilled village immigrants, was particularly hard hit [by the mid-1970s recession and government development cutbacks]. [In 1977] wages declined as much as 30 percent for such workers."52 Add to this situation a fairly strong historical tendency for economic problems (e.g., a rise in the price index) to be followed by unrest in Iran,53 and the economic stage was set for the Iranian Revolution. Notes * Research assistance by Kirsten Ingerson is gratefullyacknowledged; she is also exculpated from any errors in this article. Useful comments were providedby several reviewers of this journal. 1. The mission, chairedby Etienne Hirsch, was in Iranat the end of 1971 and 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 indication that a problemwith minimumwage enforcementmay exist), pp. 102, 100. 4. Ibid., p. 98. 5. Ibid., p. 32. 6. Ibid., p. 20. 7. Ibid., p. 31. The IKLR shows the additionalcapitalassociatedwith the creation of one new job and is estimatedby dividingindustry-specific investment targets by the correspondingincreases in employment. 8. I include myself in this group. Duringthe summerand fall of 1972, I presented a critique of the mission's arithmetic(containingsome of the remarksbelow) at the Universitiesof Illinois, Cincinnati,andMichiganState and at the U.S. Departmentof Labor's InternationalManpowerInstitute. I also discussed some reservationswith Abdol-Majid Majidi,ministerof labor, during an unrelatedresearch sojournin Tehranduringthe summerof 1972. 9. Ministryof Economy, Bureauof Statistics, Commencement and Operation 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 that time, the exchangerate was approximately

70 rials = $1. 11. ILO, Employment and Incomes Policies for Iran, p. 20. 12. Methodology for Macro-economic Projections, ILO, Employment and Incomes Policies for Iran, pt. C.

13. Ibid., p. 117. 14. Ibid., pp. 118, 127, 128. 15. Whetherit was sensible, underthese circumstances,to invest so much of the mission's capital in the Methodologyremainsan open question. 16. Norriss S. Hetherington,"Industrialization and Revolution in Iran: Forced Progress or Unmet Expectation?" Middle East Journal (Summer 1982),pp. 362-77, esp. p. 362. 17. Ibid., pp. 369-70.

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Economic Development and Cultural Change 18. ArnoldHottinger,"The Background of the IranianUpheaval," Swiss

Review of World Affairs (March 1979), pp. 14-15.

19. Janhangir Amuzegar,Iran: An EconomicProfile (Washington,D.C.: Middle East Institute, 1977),p. 251. 20. Abdol-Majid Majidi,"Iran, 1980-85:Problemsand Challengesof Development," WorldToday(London) (July 1977),pp. 267-74, esp. p. 271. 21. Amuzegarhad held ministerialposts and was to become primeminisin 1977andhad been ter; Majidiwas head of the Plan and BudgetOrganization ministerof labor and social affairsduringthe ILO mission.
22. Robert E. Looney, Economic Origins of the Iranian Revolution (New

York: PergamonPress, 1982). 23. Amuzegar,p. 252. 24. KarimPakravan,"GovernmentInterventionin the Industryof Iran, 1964-78" (workingpaper at the Hoover Institution,StanfordUniversity, July 1981).
25. Homa Katouzian, Political Economy of Modern Iran (New York:

New York University Press, 1981),p. 267. The figuresin table 4 were derived by Katouzian from Bank Markazireports; the numeratoris "net domestic fixed capitalformation,"and the denominator is "change in the laborforce." Use of "labor force" instead of "employment" will tend to understate IKLR-if the unemploymentrate was growing, rises in IKLR will be understated. Nevertheless, Katouzian'sfiguresfor the whole economy do not seem inconsistentwith the rough estimates for the industrialsector based on commencementpermits (see n. 9). 26. ShahpurGudarzi-Nejad,"A New Phase in the Evolution of Urban
Centers in Iran," Durham University Journal (December 1977), pp. 54-57. For

a more extensive review of the impact of 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. Richard Cottam, "Goodbye to American's Shah," Foreign Policy (Spring1979), pp. 3-14, esp. p. 8.
31. Robert E. Looney, A Development Strategy for Iran through the

1980s (New York: PraegerPublishers, 1977),p. 39. 32. Ibid., p. 42. 33. Rodney Wilson, "Industry Feels the Squeeze from High Wage
Labour," Middle East Economic Digest (June 30, 1978), pp. 10-11.

34. Mahmood Yousefi, "The Iranian ManpowerShortage Problem: A

Note," Malayan Economic Review (April 1978), pp. 49-53.

35. Hossein Askari, John T. Cummings,and Mehmet Izbudak, "Iran's Migrationof Skilled Labor to the United States," Iranian Studies (WinterSpring 1977),pp. 3-35. 36. Looney, A Development Strategy, pp. 40-45; Kooros Maskooki, "Impactof LaborScarcityon Iran'sEconomic Development:A Programming Model" (Ph.D. diss., University of Nebraskaat Lincoln, 1977).
37. Looney, A Development Strategy, pp. 45-46.

38. Amuzegar(n. 19 above), p. 252. 39. Only 60,000-70,000 of the 300,000 new entrantsto the labor market were being absorbed in industry (RichardF. Nyrop, ed., Iran: A Country D.C.: AmericanUniversity, 1978],p. 81). "The industrial Study [Washington,
sector was able to play a dynamic role . . . only because rapid growth in

demand for construction workers offset the relatively poor performancein

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James G. Scoville

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(SamuelS. Liberman,"Prospectsfor Developmentand Popumanufacturing"

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-

diana University Press, 1981),p. 81. 43. Amuzegar(n. 19 above), p. 252. 44. Kazemi (n. 26 above), p. 44. 45. Stempel, p. 81.
46. Plan and Budget Organization, Employment and Unemployment in

Iran, 1976-1980(Tehran:Planand BudgetOrganization, 1982),p. 26 (available only in Persian). 47. Katouzian(n. 25 above), p. 259. 48. Arnold Hottinger, "Tehran:Portraitof a TroubledCity," Swiss Review of World Affairs (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 a generaldiscussion. For greaterdetail, see AhmadJabbari,"EconomicFactors in Iran's Revolution:Poverty, Inequality,and Inflation,"in Iran:Essays on a Revolution, ed. Ahmad Jabbariand Robert Olson (Lexington, Ky.: Mazda Publishers, 1981).
52. Barry M. Rubin, Paved with Good Intentions: The American Experi-

ence and Iran (New York: Oxford University Press, 1980),p. 270. 53. FarhadKazemi, "Economic Indicatorsand PoliticalViolence in Iran: 1946-1968," Iranian Studies (Winter-Spring1975),pp. 70-86.

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