A Game Theoretic Model of Iranian Labor Market

  • Younes Brumand Department of Economics, Faculty of Economics and Management, Urmia University, Urmia, Iran
  • Masoomeh Asghari Firuz Salary Department of Economics, Islamic Azad University, Tabriz Branch, Tabriz, Iran
Keywords: Iranian labor market, labor productivity, game theory, government intervention, Nash equilibrium


In this paper, we analyze the interactions among workers, employers, and the government in the Iranian labor market using game theory. For this purpose, different games among the factors affecting the labor market are analyzed in both static and dynamic situations. In each case, intervention and non-intervention of the government are also examined. Thus, four different types of games are studied, including a static game between worker and employer, without government intervention; a static game among workers, employers, and the government; a dynamic game between worker and employer, without government intervention; and a dynamic game among workers, employers, and the government. In the first three games, Nash equilibrium implies low productivity of worker, low employer’s profits, and high unemployment rate in which players want to maintain the status quo. However, in the dynamic game among workers, employers, and the government, the sub-game perfect equilibrium of the game can provide some conditions in which the labor market gets away from the low productivity situation


Download data is not yet available.


Al-Badavi, A. & Alijani, F. (2007). Does electronic learning improve labor productivity?. Sharif Journal, 43, 31-37.

Dufwenberg, M. & Kirchsteiger, G. (2000). Reciporcity and Wage Undercutting. European Economic Review, 44, 1069-1078.

Flesch, J., Schoenmakers, G. & Verieze, K. (2009). Stochastic Games on a Product State Space. International Journal of Game Theory, 38, 263-289.

Gibbons, R. (1992). Game Theory for Applied Economists. Princeton: Princeton University Press.

Jones, C. & Simon, I. (2005). Wage determination under plan and early transition: Bulgarian evidence using matched employer–employee data. Journal of Comparative Economics, 33, 227–243.

Komeijani, A. & Memar Nejad. A. (2004). The importance of the Quality of Labor and R&D in Economic Growth. Trade Research Journal, 31, 1-31.

Mahmoudzadeh, M. & Asadi, F. (2007). Impacts of IT on the Growth of Labor Productivity in Iranian Economy. Trade Research Journal, 43, 153-184.

Mitrou, L. & Karyda, M. (2006). Emloyees’ Privacy vs. Employers’ Security: Can They Be Balanced?". Telematics and Informatics, 23, 164–178.

Mohammadi, T. & Akbari Fard, H. (2008). The Effects of Productivity Shocks on Economic Growth of Iran. Economic Researches of Iran, 35, 177-204.

Rabiee, M. (2009). The Effects of Innovation and Human Capital on Economic Growth. Knowledge and Development Journal, 26, 122-142.

Osborne. M & Rubinstein. R (1994). A Course in Game Theory. Massachusetts: The MIT Press.

Sadeghi, H. & Brumand, Y. (2012). Analysis of Relationship among Employee, Employer and Government Based on Game Theory. Economic Research Journal, 98, 51-67.

Shy, O. (1995). Industrial Organization: Theory and Applications. Massachusetts: The MIT Press

Wang, G. (2008). A game-theoretic model of the participants in the rural migrant workers’ work-related injury insurance system. Journal of US-China Public Administration, 5, 52-56.
How to Cite
Brumand, Y., & Asghari Firuz Salary, M. (2020, June 30). A Game Theoretic Model of Iranian Labor Market. UKH Journal of Social Sciences, 4(1), 1-20. https://doi.org/https://doi.org/10.25079/ukhjss.v4n1y2020.pp1-20
Research Articles