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In this article an attempt has be to assess the employment situation in the by using a labor demand function. By using the cost pattern function of the firm, a construction demand function for labor for the period 1974-2003 has been estimated. By applying the economertric method of ARDL, a long run and a short-run model was estimated. The results show that there exists a negative relation between the real wage rates and the construction employment level and a positive one between the value added of the construction sector and its employment level. The Error Correction Model (ECM) results indicate that the construction demand for labor nears its long-run equilibrium at a rate of 65 percent annually. Finally by using the two scenarios of the model the employment level in the construction sector through the end of The Fourth Planning Program was forecasted. The results of both scenarios show higher employment rates than the ones predicted by The Third Planning Program.
JEL Classification: L13, L1, C22, C2