Examination of Kuznet's Income Distribution Hypothesis in Rural Areas of Iran, 1971-2007

How to distribute the income resulted from growth is a crucial factor in social welfare improvement and poverty reduction. Thus, this study aims at the examination of Kuznets hypothesis on income distribution in rural areas of Iran during the period of 1971-2007. For this purpose, linear and non-linear models of Ahluwalia are used. Impacts of the Iran-Iraq war and the Islamic Revolution of Iran are examined, though eliminated afterward due to the insignificant results in the model. The study results do not support the hypothesis in Iranian rural areas. Also, according to the findings, the economic growth has no impact on the improvement of income distribution in rural areas and even made it worse. In contrast with overall growth, the agricultural growth has shown a significantly positive effect on the improvement of income distribution in Iranian rural areas.