Utility and Social Welfare Function in Iranian Provinces (Investigating the Process of Changes and Convergence of Welfare)

One of the most important topics in economics is the study of utility and social welfare. Therefore, the purpose of this paper is to derive the utility function and social welfare function of the provinces of Iran during 1380-1396. For this purpose, the regional utility function is used to extract the utility of the provinces. To calculate these functions, the Autoregressive Distributed Lag Panel data(pmg/ARDL) was used in Eviews 9 and Excel software. Then, the Bergson-Samuelson welfare function, which is computed as a sum of utility, was used to calculate the social welfare function. Finally, beta convergence method was used to investigate welfare convergence between provinces of the country. The results of the extraction of utility and social welfare function show that social welfare has been in steady growth in the period 1380-1386. After a slight decline in 1387, it increases again. In 1392, this growth stops and increases again in 1394 and 1395. This increase continues until 1394 and declines during the years of 1395 and 1396. Also, the results of beta convergence show that the provinces such as Chaharmahal-e-Bakhtiari, Qazvin, Lorestan and Kurdistan have the highest convergence rate, considering the Solow-Swan hypothesis, they are less welfare than other provinces and provinces such as Tehran, Isfahan, Hamedan and Markazi, which have lower convergence rates, have higher levels of welfare. While, the convergence rate for the country is -0.1718. This means that the entire provinces, on average, are moving toward an average welfare of 17.18% annually. Also, since the beta convergence coefficient for provinces and countries is between zero and negative one, the existence of convergence in provinces and countries is confirmed.