Investigation the Effects of Targeted Subsidies on Self-employed and Wage and Salary Earners: Based on poverty and inequality

The main objective of this article is to investigate the impact of targeted subsidies law on poverty and inequality among Self-employment and wage and salary earners in Iran. Contrary to the literature which is based on the comparison between the absolute values of indicators, this study employs the statistical confidence intervals. To doing so, we use rural and urban household’s expenditure-income data during 2006-2017 and gini and FGT indices. Although the absolute values of indicators showed that they improve during 2012-2017 in compare to 2006-2010 period, but the results of indicators difference based on the statistical confidence intervals do not confirm this findings, for example in the years after targeted subsidies implementation, the inequality rate decreased for these two professional groups in rural areas, however, the inequality rate increased among wage and salaries earners for urban areas and there was not any significant change for self-employed jobs. Without the consideration of geographical areas, targeted subsidies aggravated inequality among wage and salaries earners. In this regard, the results of poverty indicators showed that wage and salaries earners share of total poverty is fixed in urban areas and it increased in rural areas during the fifth development plan and without consideration of geographical area, the headcount poverty and poverty gap increased for these two professional groups. Therefore, in order to correct policy-making, the judge about the impacts of policies based on the comparison of indicators absolute values is not enough and it requires more accurate investigations at the professional subgroups level.