Comparison and Measurement of Welfare Inequality According to the Islamic and Conventional Economics

From the perspective of Islamic basic, welfare inequality is only acceptable when it is not due to discrimination and considered the share of poor people in rich wealth. but in the conventional economy, effective inequality is only due to the difference in human capital. The study by using the micro-level Households’ Income and Expenditures surveys data from Statistics center of Iran over 2005 to 2014 and applying Machado-Mata and Oaxaca-Blinder decomposition measures welfare inequality according Islamic and conventional Economics. The results of the study shows more than 90 percent of the welfare inequality between the top and bottom deciles of income distribution in both Islamic and conventional economic is efficient. But the share of poor people of rich income is considerable, so that in 2008 has highest share and over 2010-2014 has been increased. In general, because of the attention of the rich to the poor in Islamic economics, effective inequality in Islamic economics is less than conventional economics. Therefore implementation of the principles of Islamic economics can provide a basis for reducing inequality.