Some Experimental Evidences of the Relationship between Poverty and Energy Consumption in Iran

Considering the different economic and social dimensions of the poverty phenomenon and the importance of the poverty reduction in the countries and according to the role of energy in poverty reduction, this study has been conducted to analyze the impact of energy consumption on poverty reduction in Iran’s economy. For this purpose, Simultaneous equation method with using two-stage least square(2SLS) and three-stage least square(3SLS) estimators, were used to estimate the relationship between energy consumtion and poverty in Iran during the period of 1368 to 1394.
Results indicate that energy conosumtion can be effective on poverty directly and indirectly. The increasing in energy consumption leads to poverty reduction directly because of the various benefits of energy consumption and, on the other hand, with the positive and significant effect of energy consumption on economic growth and improving income distribution leads to poverty reduction indirectly. Also, results show that there is not enough evidence that comfirm positive effect of subsidies targeting plan implementation on poverty and inequality reduction in the Iranian economy. Therefore, Iranian policy makers should consider theire various policy consequences when they make a policy related to energy sector such as the implementation of the complementary steps of the subsidies targeting plan.