The Effect of Macroeconomic Indices On Income Distribution in Iran

Document Type : Research Paper



To make an assessment of the effect of macroeconomic indices on income distribution in Iran this study has used variables such as the share of sum of income tax and wealth tax in total tax revenue, the share of social security and social welfare costs in the state budget, exchange rate disorders, the growth in income per capita and unemployment rate. This study has taken use of FM-OLS method( PHLIPS & HANSEN(1990)) to determine the long-term relation among variables. The results of this study indicate that the unemployment has been greatest elements of growth of disparity within 1974-2004, while taxation, social security and social welfare policies have brought reduction in disparity in Iranian economy. However, economic growth, unemployment and exchange rate disorders have brought an increase in disparity. This study has taken use of Rolling Regression (R-R) to evaluate and assess the variations in the parameters contributing to distribution of income. The result from rolling regression indicate that the change in the policies adopted of social security, social welfare and policymaking for bringing a reduction to disparity and social welfare have considerable fluctuations, the fact that tells us about the absence of proper strategy in policymaking.