Study the Effect of Housing Prices on Income Inequality in Urban and Rural Areas of Iran

Income inequality has been one of the debating issues among economists and policy makers from the last few decades. So that, reducing inequality has been one of the main concerns of social reformers and policy makers and it is considered as one of the main problems in many developed and developing countries. Furthermore, housing has a vital role in household’s consumption and asset portfolio and it is important because of playing various roles in the individual’s lives, the economy and society. Therefore, considering the importance of income inequality as one of the concerns of economic policy makers and the importance of housing prices in the economy, this research seeks to study the effect of housing prices on income inequality in urban and rural areas of Iran by using Johansen-Juselius method over the period of first quarter of 2009 to forth quarter of 2019. The results of the study indicate that, housing prices has a significant positive impact on income inequality in urban and rural areas of Iran. So that, the results of the study based on the Gini coefficient index as an indicator of measuring income inequality, indicate that in the urban areas in the long run, one percent increase in the housing prices increases the Gini coefficient by 0.61 percent and in the rural areas in the long run, one percent increase in the housing prices increases the Gini coefficient by 1.37 percent. Also, the results of the study based on the ratio of the cost of ten percent of the richest to the cost of ten percent of the poorest population as an indicator of measuring income inequality, indicate that in the urban areas in the long run, one percent increase in the housing prices increases the ratio of the cost of ten percent of the richest to the cost of ten percent of the poorest population by 6.10 percent and in the rural areas in the long run, one percent increase in the housing prices increases the ratio of the cost of ten percent of the richest to the cost of ten percent of the poorest population by 3.99 percent.