The Effect of Energy Price Increases on Income Distribution in Iran's Economy

This article reviews the increasing energy prices with cash paid on income distribution in Iran's economy. Gini coefficient is an indicator of the income distribution. First, assuming no impact of energy price increases on economic growth, inflation and employment and using different deciles of household income for 1387 year, energy price increases on each of the deciles calculated and then, with cash subsidies, the Gini coefficient is calculated. Results show the effect of increasing energy prices with direct cash payments, the Gini coefficient is reduced.
In order to fully evaluate the effects of energy price increases on income distribution, using simultaneous equations, direct and indirect effects of these increases on economic growth, inflation and employment, together with cash payment on the Gini coefficient were examined. The results showed that the Gini coefficient increases. In other words, such subsidies with targeted cash payments, the income distribution will become more unbalanced.