Financial Development and the Distribution of Income in IRAN

The main purpose of this study was to evaluate the effect of financial development on income distribution in Iran using panel data of 28 provinces in the years of 1379 to 1385. For this study, data on the Gini coefficient, the growth rate of GDP per capita (GDP), government spending, inflation and financial depth variable and financial performance indicators were collected and organized. The model using static and dynamic panel models, generalized moments estimator (GMM), was estimated. The results show the depth of financial performance indicators, have a significant effect on reducing inequality in Iran. Government spending, unlike inflation rate, reduces inequality. Also in this study, the Kuznets inverted U relationship was confirmed in the provinces of Iran based on the results we can claim the role of financial development in reducing inequality.