The Impact of Urbanization on the Convergence Rate of the Income Distribution in Selected Provinces of Iran (Spatial Econometric Approach)

Regional inequalities have always been one of the concerns of the government planners and they have attempted to recognize these inequalities and devise particular policies to curb them. The motivation to work on this domain has led to the development of different indices and techniques to measure regional inequalities. β-convergence examination is one of the aforementioned methods of measuring income distribution. An important point is that, urbanization trend cannot be examined apart from economic variables either in Iran or in other countries of the world and economic variables such as households’ income are expected to be affected by the degree of urbanization. Consistent with this reasoning, we can say that urbanization is one of the effective factors on income distribution; therefore, the present paper is focused on the examination of urbanization effects upon convergence rate of income distribution between urban and rural areas in 25 selected provinces of Iran during the time period of 2001-2011 using general spatial econometric model and ordinary least squares (OSL) method. The findings indicated the existence of income distribution convergence among the examined provinces during the above-mentioned period. Moreover, during this period and following the increasing degree of urbanization, the conditional convergence rate for decreasing the gap between current income of urban and rural and its steady state equilibrium is increased as compared with the absolute convergence rate.