The Impact of Black Economy on Poverty in Urban Areas in Iran

Poverty causes human distress, wandering of the mind and provision of sorrow. The leaders of UN member states were committed in the third millennium that the number of the poor should be reduced by half up to 2015. However, since there is a close relationship between the black economy and poverty in the Iranian economy, which has a growing trend, this shows the importance of identifying the factors effecting on the creation of black markets in urban areas on creating poverty. So the first step in designing and implementing new programs to reduce poverty is to review these offices. This study analyzes the effects of the black economy in rural and urban areas on poverty by using regression model (VAR). using this model, the variables of per capita income, unemployment, tax on income, direct tax burden, the degree of openness of the economy and inflation as the factors, which cause the black economy were studied for the years 1984-2007. The results showed that, in both the rural and urban areas, the per capita income variable has the most influence on poverty. This shows that if the policy makers want to improve and irradiate the poverty in urban or rural areas, correct changes in the per capita income variable with all accessories and institutional and distributation arrangements can be usefull.