The Impact of Economic-Political Factors on Inequality in the First (1989-1993) and Second (1995-1999) Development Plans

Economic and political factors can reduce inequality or can gradually diminish households' consumption and increase inequality. Considering the significant difference in the political environment and economic policies in the First and Second plans, the income inequality was not the same in these two periods. This research compares the impact of economic and political factors on income inequality in the First and Second development plans using two quantitative and descriptive models. The quantitative model used the ARDL and time series data of 1984-2020. This model uses the variables such as government debt growth to banking sector, liquidity growth, short-term external debt growth, labor productivity, corruption index and the dummy variable for the first and second plans. In the qualitative model, the most important economic policies and political factors affecting income inequality, which directly or indirectly affect through different channels, are analyzed in two plans. The results of both qualitative and quantitative models show that the income inequality has a negative relationship with liquidity growth and labor productivity; meanwhile the income inequality has a positive ‎relationship with government debt growth to the the banking sector, liquidity growth with a lag, short-term external debt and corruption.