The Impact of Urbanization on Income Distribution with Emphasis on the Kuznet's Theory

Theoretical bases and previous studies hold that lots of factors including inflation rate، tax revenue، urbanization growth، economic growth and other variables influence on income distribution. Increasing rate of urbanization in recent decades and the importance attached to the socioeconomic aspects of income distribution make it imperative to survey the effects of urbanization on income distribution in the country. This article mainly tries to evaluate the impact of urbanization on income distribution in Iran through using econometric method and testing Kuznet''s inverted U theory during the period 1972-2010. This study showed that the effect of urbanization on income distribution is in the form of a nonlinear relationship، depending on industrialization process and consequences of urbanization. The findings indicated that urbanization firstly reduces the economic inequality; yet، after a certain while، it increases the economic inequality. Moreover، this study confirms Kuznets'' inverted U theory regarding the relationship between economic growth and income distribution.