An Survey on the Dynamics of Income Distribution by Introducing and Measuring Different Indices on Income Mobility in Iran

Common methods on evaluating and measuring inequality cannot reflect the internal changes of society in terms of displacement in income groups, income transfer and so on. These indices are not suitable for investigating the dynamics of income distribution. In this study, concept of "income mobility" is used to evaluate the change of income distribution. Contrary to the theory of measuring inequality and poverty, literature on income mobility is not integrated, and because of the multidimensional nature of income mobility, it is difficult to provide the comprehensive definition on it. In this study, different concepts and indicators on income mobility are calculated.
Thus, by using the theory of Markov chain- first- second and fifth-order as well as transition probability matrix, the pattern of income distribution are analyzed and forecast. This objective is fulfilled by constructing pseudo panel that combines thirty years of cross-sectional Household Expenditures and Income Surveys from 1984 to 2013. The results indicate that the probability of transition from a certain income quintile to the same quintile in successive time is high. That indicates low mobility and stability status. The results also show low flexibility and asymmetric distribution of life opportunities in the country. These findings reveal a serious attention to the inequality of opportunity.