Diversification of Industrial Activities and Income Inequality in the Provinces of Iran

Economic growth, defines a structure of the development of the industry that in addition achieving a higher economic growth,  the quality of a desired economic growth also creates. In this regard, the present study investigates the effect of diversification of industrial activities on income inequality using the panel data approach and the statistical evidence of Iran's provinces for the period of 2009-2019. The results of the diversification index of industrial activities show that the highest value of this index for Bushehr province is 0.8 and its lowest value for Tehran province is 0.09. In addition, the Gini coefficient in Sistan and Baluchistan province is 0.44 and in South Khorasan province it is equal to 0.33. The panel data results show that the government expenditure, education expense, and economic growth have a positive and significant effect on income inequality, and industrial concentration and the square of economic growth have a negative effect on income inequality. Therefore, the diversification of industrial activities based on the relative advantages of the region has great importance to achieve the optimal income distribution.