The Structure of Inequality in Iran's Economy

Sound income inequality issue and poverty measures and reliable statistical inference have become increasingly important in policy making. As inequality is broader concept than poverty in that it is define over the entire population, the present paper is seeking identification of the inequality structure in Iran’s Economy in the recent decade and realization of effective factors and components on inequality changes among Iranian households in the decade and especially on the 1383-84 period by using Gini and Atckinson coefficient, generalized entropy indices and quantile regression. In the paper by utilizing the data from the Statistical Center of Iran’s Household Expenditure and Income Survey for the period of 1997-2005, as calculating the inequality indexes of Gini and Atckinson coefficient, it was tried by decomposability states of generalized entropy indices, the inequality is calculated by deciles levels and based on the separation of the household expenditure. In addition, by means of quantile regression, the manner of affecting the household characteristics on the increase of inequality, on the 2005 comparing to 2004, along the achieved results from the separation of the entropy class indexes, have been analyzed. The Gini measured a decrease in income inequality from 1997 to 2005. In urban areas it is decreased from 0.431 to 0417 and in rural areas from 0.39 to 0.41. The result of Theil index indicating that, in urban areas about the %85.7 to %88.9 of inequalities were the consequence of the inequality between deciles and in rural areas it was about %81. 9 to %89.2. the results of Atckinson and GE(0) index measured a decrease in income inequality from 1997 to 2005. But according in GE(0) index results in 2004 inequality in urban areas increased and in rural areas decreased.The result of quantile regression shows that, supporting the households with female head and education lower than high school diploma who are tenants has positive effect on the reduction of inequality in the deciles. Especially overlooking supervision over the households housing expenditure and lack of support on educational expenditures of income low deciles, can lead to the rise of inequality among the rural households and ill consequences on the coming years. The results indicating that from 1997-2005 the Iran’s economy inequality structure, despite minor changes on its trend, has enjoyed a relative stability, and on the average about %87 of inequalities were the consequence of the inequality between deciles. And food component had positive effect on inequality reduction in rural area, but in urban area non-food expenditures had strong effect on reduction of inequality.