Iran's Demographic Crisis

With Iran now committing to at least temporarily halt the expansion of its uranium enrichment program, things will really change for a significant number of Iranians who have been trapped by a geopolitical crisis that predated them.  As you will see in this posting, Iran's large population of young people should be the biggest beneficiary of the removal of sanctions over the long term.

When measured in terms of population, Iran with its 79.8 million people, is the 18th most populous nation on earth.  What is most interesting about Iran is the large number of young Iranians, born after 1980.  As shown on this population pyramid, there are a very elevated number of Iranians under the age of 30:

Of the total, 19.8 percent are between the ages of 15 and 24 years and 23.8 percent are between the ages of zero and 14 years.  Over 60 percent of Iran's population is under the age of 30.  There are a total of 34.773 million Iranians under the age of 24.  The median age of the population is 27.8 years with a youth dependency ratio (the percentage of the population that is economically dependent on the support of others) of 33.6 percent.  To help you put these numbers into context, in the United States, 13.7 percent of the population is between the ages of 15 and 24 and 20 percent is between the ages of zero and 14 with a median age of 37.2 years and a youth dependency ratio of 29.4 percent .  This results in a population pyramid that looks like this:

In the case of the United States, you will notice that there is a very slight bulge in the pyramid around age 55; this is thanks to the baby boomers.  You will also notice that there is no major bulge in the lower part of the pyramid, unlike Iran.

Here is a graph that shows the fertility rate for Iran back to 1967:

Notice that until the mid 1980s, an average Iranian woman gave birth to between 6 and 7 children.  It wasn't until the late 1990s that Iran's fertility rate fell to the replacement rate of 2.1.  It is the elevated fertility rate that has led to the current demographic imbalance in the nation.

The current fertility rate varies quite widely across the nation as shown on this map:

The more rural areas in the southeast of the nation still have birth rates that are well in excess of the replacement rate.

Now, let's look at some background economic data for Iran.  Here is a bar graph showing the growth rate of Iran's economy since 2007:

Since the beginning of 2012, Iran's economy has contracted markedly, largely due to the imposition of sanctions.  The resulting increase in the prices for many imported goods and inputs has resulted in an 80 percent depreciation in the value of the Iranian Rial between March 2012 and March 2013 and has created this problem:

Over the past 12 months, Iran's inflation rate hit 36.2 percent, 11.4 percent higher than the previous year.

Now, let's go back to Iran's young population.  With the significant number of young Iranians and an economy that is shrinking, the ability of young Iranians to get ahead economically has been threatened by the imposition of sanctions.  In the three decades since the Iranian Revolution, the following economic problems for Iran's youth have developed:

1.) Unemployment among young Iranians has doubled since 1990 with young people between the ages of 15 and 29 making up 70 percent of the unemployed in the nation.  Roughly one in four males is unable to find a job and around half of women with an advanced education are unable to find employment.  The youth unemployment rate is estimated to be at around 25 percent, more than twice the nation's overall unemployment rate.

2.) The government is able to generate only 300,000 new jobs annually, well short of the one million new jobs that are needed every year to absorb the number of young Iranians entering the workforce.

3.) With a university degree, the average time between graduation and starting work is around three years.

4.) Up to three-quarters of Iranians in their twenties still live with their parents because they cannot afford to live on their own.

The grim outlook for Iran's youth has led to widespread use of narcotics.  Internal statistics show that Iran had 1.2 million hardcore drug addicts with another 130,000 becoming addicted every year.  According to the 2012 United Nations World Drug Report, heroin and opium seizures in Iran accounted for a very significant portion of worldwide seizures as shown on these graphs:

It is Iran's proximity to Afghanistan that explains the significant volumes of opium passing through the nation.  When opium production was halted in Iran in 1979, production shifted first to Pakistan and then to Afghanistan.  Ready availability of both drugs has led to Iran having the world's second-highest prevalence for the use of both heroin and opium after Afghanistan.

From this posting, we can see that Iran's tens of millions of young adults are facing immense economic hurdles.  The removal of at least some sanctions by the nations involved in negotiating the reduction in Iran's nuclear program should help the nation's economy improve.  With a very significant number of young Iranians competing for jobs and one million new young job seekers every year, any improvement in Iran's economy can only better their lot in life as jobs are created and price pressures drop.

In closing, what I always find interesting about the imposition of international sanctions on a reviled regime is that it is almost always the innocent who suffer the most.