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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.

Suggested Citation

  • Djavad Salehi-Isfahani, 2006. "Revolution and redistribution in Iran: poverty and inequality 25 years later," Working Papers e06-3, Virginia Polytechnic Institute and State University, Department of Economics.
  • Handle: RePEc:vpi:wpaper:e06-3
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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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    References listed on IDEAS

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    1. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
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    3. 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.
    4. Ravallion, M., 1992. "Poverty Comparisons - A Guide to Concepts and Methods," Papers 88, World Bank - Living Standards Measurement.
    5. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2004. "Polarization: Concepts, Measurement, Estimation," Econometrica, Econometric Society, vol. 72(6), pages 1737-1772, November.
    6. Milanovic, Branko & DEC, 1994. "Determinants of cross-country income inequality : an augmented Kuznets hypothesis," Policy Research Working Paper Series 1246, The World Bank.
    7. 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.
    8. 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.
    9. 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.
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    Cited by:

    1. Maasoumi, Esfandiar & Mahmoudi, Vahid, 2013. "Robust growth-equity decomposition of change in poverty: The case of Iran (2000–2009)," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(3), pages 268-276.
    2. Djavad Salehi-Isfahani, 2009. "Poverty, inequality, and populist politics in Iran," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(1), pages 5-28, March.

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    Keywords

    Iran; Poverty; Inequality; Redistribution;

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