Investigating the Income and Welfare Convergence in Provinces of Iran: A Cluster Analysis

This paper aims to investigate convergence hypothesis in Iran provinces in terms of per capita income and per capita consumption over the period 2000- 2014 using the cluster analysis. In order to analyze this issue more exactly, in the first step, using taxonomy method, the provinces of the country are divided into three categories: underdeveloped provinces (5 provinces), developing provinces (13 provinces) and developed provinces (13 provinces). Then, the possibility of forming convergent clusters in terms of per capita income and per capita consumption is investigated in each group using cluster analysis. The results show that two convergent clusters (each cluster consists of only two provinces) are observed for per capita income among developed provinces. In studying the convergence status of the mentioned provinces, two clusters (each cluster with two provinces) are identified regarding per capita consumption. In the developing provinces, two clusters (one cluster with eight provinces and another one including two provinces) are formed in terms of per capita income, and two clusters are generated on the basis of per capita consumption(each cluster includes three provinces). In underdeveloped provinces, there is no convergent cluster. Therefore, in general, the findings indicate the divergence between per capita income and per capita consumption among all underdeveloped provinces and most of developed provinces, but there is some evidence of convergence in terms of per capita income among developing provinces in the long run.