The Affect of Population Aging on Income Inequality in Iran

An increase in life expectancy was due to scientific advances in the health sector, which began with the developed economies and quickly had repercussions in developing countries. From among the results of such development,  was an increase in population and changes in population age structure towards older ages. Population aging will have significant impact on macro-economic factors including income distribution.  This study evaluates the impact of the age structure on the income distribution, over the period of 1985 to 2015 in Iran. The “Gini coefficient decomposition” based on household expenditure (income) in urban and rural areas shows that; with increasing age of the head of the households, income inequality increases. Thus, even if other influential forces on inequality, such as inflation, economical recission, etc. are stopped,  the populations aging could be a potential factor for the future growth of inequality and poverty. Hence, for an economy which has an unequal pattern in income distribution, and experiencing a rapid population transition, the population ageing can be an important challenge in the policy making of economic growth.