Determinants of Poverty in Rural Areas: Case of Savejbolagh Farmers in Iran

The purpose of this study is to explore the determinants of poverty in rural areas in Iran, for which the Savejbolagh Township located in the north of Iran, was selected as a representative. The study utilizes farm and household cross-sectional data for 1998-99 that was collected through personal interviews with 350 farmers from the Savejbolagh Township, who were selected by stratified random sampling. Different socio-economic factors were compared along the farmers? income deciles. To determine the factors that would affect poverty, a linear regression model (an earnings equation) is used for the analysis. The estimated coefficients of the regressions with positive signs show that the variables will increase income and those with negative signs show the reverse effects. The effects of explanatory variables on income are interpreted to have the reverse effects on poverty. The dependent variable is a natural logarithm of the farmer?s annual income. The explanatory variables included such variables as the number of sons, farmer?s age and experience, level of education, type of production technologies, and town distance. The results show that, given the current technologies, types of education and other circumstances, alleviation of poverty and income disparities can be achieved by improvements in the assets of the poor farmers. Implicit in these results is that in order to make human capital, such as the level of education, effective in poverty alleviation we need to introduce better technologies and more modern inputs to farmers. Improvements in better roads and communication facilities can also decrease poverty.