The political economy of income distribution and redistribution policies of Iran.

Abstract

An examination of redistributional policies reveals that the agrarian reform has failed to redistribute the land in an equalitarian manner. Moreover, the overall tax burden is slightly progressive. The inefficiency of government expenditure policies have not been able to lessen the maldistribution of income.

The main purpose of this study is to investigate the structure of income distribution and redistribution policies with emphasis on the years immediately preceding the Iranian revolution of 1978-79.

In the dualistic economic development of Iran, the urban sector has been the main beneficiary while there has been a deterioration in the relative well-being of the poor rural sector. All income inequality indices for rural and urban areas show no indication of reduction. Overall income inequality can largely be explained by variations of income within rural and urban areas. Regional income inequality is not significant. The relative share of labor in national income has been diminishing while the relative income share of capital increases. The factor most responsibile for the income inequality have been found to be overall property income variation.

Consequently, it can be hypothesized that persisting maldistribution of income was a contributing economic factor to the Iranian revolution of 1978-79.