The Impact of Urbanization and its Overflows on Income Distribution of Iran Provinces using Spatial Econometrics Approach

One of the goals of establishment of Islamic Republic of Iran was expansion of justice that appropriate distribution of income in society is one of its most important aspects. Income distribution in every society is resulted from economic-social structure of that society, particularly labor market situation. Urbanization can affect the income distribution due to population migration and labor force from rural to urban areas and through the impact on labor market. This study examined the impact of urbanization on income distribution in 25 provinces of Iran in the period of 2001-2011 using spatial econometrics. The results show that an increase in the ratio of urbanization to human development index has led that income to be distributed fairer in the provinces of Iran. In addition, by comparing special maps of income distribution and the ratio of urbanization in the beginning and end of the studied period, it is concluded that the impact of urbanization on income distribution has not been a fixed process that this issue is consistent with the results of the special estimation.