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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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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