Investigating the Welfare Effects of Subsidies Targeting in Iran (Case study of Tehran and Isfahan provinces)

Economic welfare is one of fundamental issue in every countrys economy. In recent years implementation of targeted subsidies has various effects on the economy and household expenditure. In this paper is to examine the welfare effects of subsidies targeting on household expenditure. For this purpose, in this study, usingthe Stata software and Dayton & Paxon method (1997), the model of life cycle of households in the provinces of Tehran and Isfahan has been investigated. The results of household consumption expenditure separation in relation to the effects of time show that households consumption expendituretrend in Tehran is regular, However, consumption expenditures of households in Isfahan were regular before subsidies targeting, but after that they were irregular. Meanwhile, consumption expenditures of Isfahan households before targeting subsidies in some years (2004, 2007 and 2010) were lower than those in Tehran and in one year (2003).In addition, the average consumption expenditure of households in Isfahan province during the whole period, as well as after targeting the subsidies washigher than the households in Tehran province, and the average consumption expenditures of their households during the whole period, but not significant in Tehran province.