The Islamic Republic of Iran is among the few middle-income countries availing LFS data collected since the start of the pandemic. The analysis presented in this paper uses LFS data covering the period from March 2019 to February 2021, corresponding to Persian years 1398 and 1399, the latter being the first full year of the COVID-19 pandemic.<sup>7</sup>

# The Impact of COVID-19 on the Iranian Labor Market

The Iranian labor market has historically been characterized by marked differences based on gender. Similar to what has been observed in other countries in the MENA region, women in the Islamic Republic of Iran tend to have significantly lower participation rates and higher levels of unemployment comparted to men.

Over the last decade, despite the progressive increase in female labor force participation and decline in female unemployment, the gender gap in labor market outcomes has remained substantial (Table 1). Differentials in labor market outcomes based on gender add to other labor market asymmetries based on area of residence (urban vs rural) and age. In particular, the labor market in Iranian cities is characterized by lower participation rates and higher unemployment, the latter being particularly high among youth and, even more, among young women.

**_Table 1: Trends in labor market indicators, 2011-2019_**

|||**_Participa_**|**_tion rat_**|**_e_**<br>||**_Unemplo_**|**_yment ra_**|**_te_**<br>|
|---|---|---|---|---|---|---|---|---|
||**overall**|**female**|**male**|**gap (f/m)**|**overall**|**female**|**male**|**gap (f/m)**|
|**_2011/12_**|40.53|13.77|67.13|0.205|12.32|21.02|10.55|1.992|
|**_2012/13_**|41.00|14.9|67.31|0.221|12.14|19.75|10.44|1.892|
|**_2013/14_**|41.09|13.44|69|0.195|10.45|19.83|8.61|2.303|
|**_2014/15_**|40.65|13.07|68.59|0.191|10.57|19.73|8.8|2.242|
|**_2015/16_**|41.76|14.44|69.39|0.208|11.06|19.47|9.29|2.096|
|**_2016/17_**|43.21|16.29|70.43|0.231|12.43|20.74|10.49|1.977|
|**_2017/18_**|44.21|17.43|70.87|0.246|12.10|19.89|10.19|1.952|
|**_2018/19_**|44.51|17.55|71.61|0.245|12.06|18.94|10.37|1.826|
|**_2019/20_**|44.06|17|71.1|0.239|10.65|17.53|9.01|1.946|

Note: Survey weights used in the analysis Source: LFS various years The COVID-19 pandemic had a sizable impact on employment levels in the Islamic Republic of Iran, with the negative effects materializing primarily through changes in labor market participation. Between 201920 and 2020-21, the employment rate of the working age population declined by 2 percentage points, corresponding to approximately 1 million jobs being lost among the population aged 15 and above. Job losses resulted in a substantial decline in labor force participation, with inflows into inactivity originating not only from employment, but also from unemployment. Overall, between 2019-20 and 2020-21, labor force participation declined by 3 percentage points, going from 44.05 to 41.26 percent and unemployment declined from 10.65 to 9.61 percent. The labor market impact of COVID-19 persisted throughout the first year of the pandemic, with no variation across quarters (Table 2).

> 7 For the remainder of the paper, Persian years 1398 (spanning March 2019 to February 2020) and 1399 (spanning March 2020 to February 2021) will be referred to as 2019-20 and 2020-21.

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