A Study of the Relationships between Income Inequality and Consumption Expenditure Inequality in Iran, during 1979-2006

Income inequality is considered as one of the main economic problems. Income inequality affects the consumption structure via the changes in demand and the composition of expenditure basket. This paper investigates the relationship between expenditure consumption and income inequality and studies their trends in the Iranian Households’ Survey. For this purpose, we have exploited household income groups data from 1979 to 2005.The results indicate that all the fluctuations of income inequality do not transmit into the composition of consumption expenditure.