Optimal adjustment of manpower-requirement forecasts: A case study of Iran

Abstract

The manpower forecasting models are frequently used in development planning. The usual approach in these models is to correlate the manpower requirement with the level of economic activities and to declare the forecasted figures as the educational targets of the development plan. In this paper we show that because of uncertainties involved in these forecasts, and due to the lack of a cost consideration mechanism in the above models, the implementation of such an educational plan causes an inefficiency in the society's allocation of resources. We then derive an adjustment rule which modifies the manpower-requirement forecasts based on balancing the trade-offs between the cost of educational and the degree of target realization. For demonstration purposes, we apply the above rule to the case of Iran and, through this application, we introduce a methodology for analyzing the sensitivity of results to different types of errors contained in the manpower-requirement forecasts.