measures ensued by the end of March, with travel bans, closure of economic activities, religious sites (including mosques) and all grades of educational institutions. Starting at the end of April, restrictions began to ease, albeit at different rates depending on the local evolution of the pandemic.<sup>2</sup> Overall, compared to other countries in the region, the Islamic Republic of Iran sustained relatively stringent containment measures throughout the entire first year of the COVID-19 pandemic, reflecting recurrence and intensity of pandemic waves.

The education sector was among the most affected by the government’s measures put in place to contain the spread of the pandemic. Schools, starting from kindergartens, remained fully closed nationally during the first three months of the crisis. Starting on May 16, schools were allowed to reopen only in areas classified at low risk of COVID-19 transmission (“white” regions) and with caps in terms of in-person attendance. Full nationwide in-person reopening of schools was only achieved in April 2022, more than two years after the start of the pandemic.

Containment measures imposed by the government to limit the spread of the pandemic were accompanied by a recovery stimulus package to both households and firms amounting to 1,000 trillion IRR (close to 5 percent of GDP). To support households, the government introduced an emergency cash transfer benefiting 4.3 million households in addition to providing micro-small loans and expansion of unemployment insurance and minimum wages.<sup>3</sup> In addition, businesses were supported through concessional loans and a moratorium on all payments to the government for three months (including taxes, social security contributions, interests on loans, utility bills...).<sup>4</sup> Economic disruption from COVID-19 added to the ongoing challenges the Iranian economy faced, spurred by structural constraints and external shocks driven by US and international sanctions. During 2010/2011 to 2019/2020, GDP grew at an annual rate of –0.1%, and the Islamic Republic of Iran’s per capita GDP fell below regional and income group averages. In 2019/20, GDP contracted by 6.8 percent year on year after US sanction waivers on the country’s oil exports expired. The spread of COVID-19 and the subsequent collapse of oil markets also impacted the last quarter of the year’s GDP (ending March 2020) as oil production reached a three-decade low.

# Data

The data used for the analysis presented in this paper come from the _Iran Labor Force Survey (LFS)_ , which is the primary source of employment statistics in the country. The survey has been conducted since spring 2005 and, for each quarter, provides representative estimates of main labor market indicators at the national and provincial levels.<sup>5</sup> The sampling of LFS is on a rotating panel basis in the sense that each household is sampled in two consecutive seasons of two consecutive years.<sup>6</sup>

> 2 Starting April 26, 2020, the management of COVID-19 related restrictions was implemented depending on the number of cases recorded at the regional level. In particular, regions, provinces and counties were classified according to a three-tier system (red, yellow, white) depending on the local number of COVID-19 infections and deaths.

> 3 The stimulus package supporting households included the following: (i) interest-free loans of 10 million rials (20 million rials for female headed households); (ii) 120 trillion rials allocated for purchasing medical equipment; (iii) 50 trillion rials allocated to the unemployment insurance fund, and (iv) raising of the legal minimum wage by 20 percent.

> 4 - <u>file:///C:/Users/wb306348.WB/Downloads/part_2 05_Zahra_Zamani.pdf</u>

> 5 The information available in LFS covers a wide range of topics including household member’s demographic and employment status, such as education, migration, working hours, industry, occupation, and experience (but not wage and income).

> 6 In each quarter, about 25 percent of the samples are interviewed for the first time, 25 percent for the second time, 25 percent for the third time, and 25 percent of the individuals are interviewed for the fourth and last time.

3