The Impact of Labor Supply Shock Induced by the Exit of Afghan Immigrants on the Output of Iran's Industry

Document Type : applicative

Authors

1 Assistant Professor, Faculty Member, Hazrat-e Masoumeh University, Qom, Iran.

2 Assistant Professor, Faculty Member, Institute for Trade Studies and Research, Tehran, Iran

10.30473/jier.2026.77649.1535

Abstract

The mass departure of Afghan immigrants from Iran in 2025 has created a significant labor supply shock. This study quantifies the effects of this shock on the output of Iran's industrial sectors using the 2020 Input-Output Table and a supply-constrained input-output model. The exit of 690,000 Afghan workers (28% of this immigrant workforce), predominantly employed in low-skilled occupations and concentrated in the provinces of Qom, Tehran, and Alborz, reduces the output of the industry, mining, and trade sectors by an average of 0.2%. However, the most vulnerable subsectors are "Manufacture of leather and related products" (a 2.87% Manufacture of leather output decrease), "Manufacture of wearing apparel" (2.23% decrease), and "Construction" (1.33% decrease), reflecting the high concentration of immigrant labor in these areas. The findings reveal heterogeneous impacts across industrial subsectors, necessitating proactive policy strategies such as supporting mechanization and enhancing the productivity of the native workforce to manage this labor supply shock.

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