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Revolution and redistribution in Iran: poverty and inequality 25 years later

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  • Djavad Salehi-Isfahani

Abstract

Despite nearly three decades of revolutionary government rule in Iran poverty and inequality remain the central issues of political debate in Iran. Public dissatisfaction, as demonstrated by the electoral success of the populist candidate in the 2005 presidential election, has been widely attributed to rising poverty and inequity. In this paper I use household survey data to describe the trends in poverty and inequality for the last three decades. The evidence shows that poverty, having substantially declined in recent years, is quite low by international standards and in comparison to pre-revolution years. Inequality improved significantly immediately after the Revolution but has remained relatively stable during the last 15 years. Significantly, poverty sharply declined and inequality decreased somewhat in the five years leading up to the election. Increased welfare of the poor over the period is also evident in access to basic services, such as electricity and safe water, as well as in ownership of household appliances. The wide gap between the evidence presented here, which shows improvement in the welfare of the poor, and popular sentiments in Iran, which indicate worsening poverty and inequality, raises important questions about the political economy of redistribution in Iran. I suggest that in the context of a distributive economy such as Iran's, in which wealth accumulation is seen to depend more on political access than individual productivity, more subjective feelings of envy and fairness may matter more than objective indicators of poverty and inequality.

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File URL: http://www.filebox.vt.edu/users/salehi/Iran_poverty_trend.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by Virginia Polytechnic Institute and State University, Department of Economics in its series Working Papers with number e06-3.

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Length: 53 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:vpi:wpaper:e06-3

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Keywords: Iran; Poverty; Inequality; Redistribution;

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References

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  1. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2004. "Polarization: Concepts, Measurement, Estimation," Econometrica, Econometric Society, vol. 72(6), pages 1737-1772, November.
  2. Esfahani, Hadi Salehi, 2005. "Alternative public service delivery mechanisms in Iran," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 497-525, May.
  3. Pesaran, M. H., 1998. "Economic Trends and Macroeconomic Policies in Post-revolutionary Iran," Cambridge Working Papers in Economics 9818, Faculty of Economics, University of Cambridge.
  4. World Bank, 2004. "Gender and Development in the Middle East and North Africa : Women in the Public Sphere," World Bank Publications, The World Bank, number 15036, October.
  5. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
  6. Mojtahed, Ahmad & Esfahani, Hadi S., 1989. "Agricultural policy and performance in Iran: The post-revolutionary experience," World Development, Elsevier, vol. 17(6), pages 839-860, June.
  7. Milanovic, Branko & DEC, 1994. "Determinants of cross-country income inequality : an augmented Kuznets hypothesis," Policy Research Working Paper Series 1246, The World Bank.
  8. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
  9. Surjit Bhalla, 2002. "Imagine There's No Country: Poverty, Inequality, and Growth in the Era of Globalization," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 348.
  10. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
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Cited by:
  1. Djavad Salehi-Isfahani, 2009. "Poverty, inequality, and populist politics in Iran," Journal of Economic Inequality, Springer, vol. 7(1), pages 5-28, March.

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