Decomposition of Poverty Changes in both Growth and Redistribution Factors in Second and Third Development Plans in Iran

This paper deals with a decomposition of poverty changes in terms of growth and redistribution factors during the second and third development plans in Iran. It has done by using recent data on consumption in rural and urban areas in Iran conducted by Statistical Centre of Iran (SCI) in 1995, 1999, 2000 and 2004.
Results in this paper show that the Third Development Plan compared to the second development plan was more successful performance to reduce poverty in both rural and urban regions. During the second plan, poverty rate reduced about 0.307 and 2.77 percent in rural and urban areas respectively. Whereas, poverty rate reduced about are 7.97 and 8.32 percent in rural and urban areas respectively during the third plan. The poverty gap index experienced a reduction during both plans. Poverty sensitivity index also shows that the poorest were benefited the most.
We found that both ‘pure growth’ and ‘redistribution’ components directly contributed to the change in poverty. Notice that Redistribution component contributed most to the poverty changes during the second plan. However, the impact of growth factor was much higher than the redistribution factor during the third development plan.