Welfare, poverty and income distribution
Hamidreza Navvabpour
Abstract
Most countries of the world define poverty as a lack of money. Yet poor people themselves consider their experience of poverty much more broadly. A person who is poor can suffer from multiple disadvantages at the same time. Therefore, focusing on one factor alone, such as income, is not enough to capture ...
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Most countries of the world define poverty as a lack of money. Yet poor people themselves consider their experience of poverty much more broadly. A person who is poor can suffer from multiple disadvantages at the same time. Therefore, focusing on one factor alone, such as income, is not enough to capture the true reality of poverty. In Iran several studies have been done to calculate multidimensional poverty index, but most of them have been used household income and expenditure survey data that have limitation to calculate related indicators. The purpose of the study is to calculate and measure multidimensional poverty and the contribution of each dimension to overall poverty at the provincial levels of Iran using the Alkier-Foster method to assist policymakers in poverty alleviation. In this study, the data of the Multiple Indicator Demographic and Health Survey (MIDHS) of 2015, which includes 33013 households and more data to offer, has been used. The results show that, in addition to Khuzestan and Qom provinces, Multidimensional Poverty Index (MPI) was particularly high in provinces on the eastern borders, while the provinces located on the northern, southern, and part of the western borders of the country, experienced less poverty. The contribution of each dimension to overall poverty also showed that the type of deprivation experienced by households in the provinces of Iran in 2015 was different.
Welfare, poverty and income distribution
Bijan Baseri
Abstract
In this paper, attempts are made to empirically examine inequality in Iran which has hindered the government to achieve a balanced provincial socio-economic development. Income inequality affects economic growth sustainability through certain channels such as different saving rates of people, incentives ...
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In this paper, attempts are made to empirically examine inequality in Iran which has hindered the government to achieve a balanced provincial socio-economic development. Income inequality affects economic growth sustainability through certain channels such as different saving rates of people, incentives to work hard, political instability and other factors as a whole. The effectiveness of government policies to address a balanced and an equitable development needs of each province depends mainly on quality of existing institutions, individual participation and their capabilities to contribute to development effort in each province. Inequality in provinces is partly due to regional inequality which in turn stems from unequitable provincial privilege to some resources, production specializations, the degree of centralization and unequitable budget allocation. In addition, the orientation and expenditure allocations mechanism pursued by government, if not rightly targeted, may affect spatial planning and economic growth which ultimately brings about inequality. In the present study, we examine how government policies have contributed (if any) to achieve the balanced growth objectives in order to decrease the existing provincial inequality gap. Based on Theil’s and Williamsons indices, we estimated inequality coefficient in Iran’s provinces for the period of 2000 to 2019. The findings in this research show that the policy measures adopted by government in some provinces, have had mixed consequences. For some provinces it has contained and reduced the inequality and for some other province it has worsened the inequality gap over the same period. Based on Theil’s Index, inequality coefficient has increased in provinces such as Tehran and some other relatively more developed provinces and for less developed provinces the index has decreased. Government budget expenditures disbursed among various provinces have had a bearing on inequality through the provision of public physical investment, promoting education provision, expanding health care services and capacity building enhancement. Introduction Income inequality affects economic growth performance and create disparities among regions in a country. The income inequality gap among regions contribute to adverse outcomes resulting from economic growth. There are different arguments in this regard. One categories of views emphasize on negative aspects of income inequality and economic growth (Alesina and Rodrik (1994), Persson and Tabellini (1994)) Li and Zou (1998), Amos (1988), Barro (2000). The other one emphasizes on positive aspects of income inequality. The first view argues that income inequality encourages economic growth, because of effectiveness brought about by incentives, efforts made, skill level of individuals and household’s capabilities. It seems that part of inequality stems from regional disparities and non performing spatial policies. Spatial inequality is the result of economic and regional policy measures adopted by government. Some contributing factors to inequality originate in leading economic sectors, and some other factor have roots in government policies and in growth leading provinces. From theoretical point of view, income inequality stems from political instability and income distribution channel affected by higher progressive income tax rates in order to finance regional equalization needs.(Alesina and Rodrik, 1994,Galor,2006). It’s obvious that regions undergoing economic development process with a time lag, will benefit from the policy experienced by others. Kuznets (1955) determined the mutual relation between inequality and economic growth in inverted U shape in the state of economic development and Williamson (1965) Generalized it to regions. Barrios and Strobl (2009), Lessmann (2014), Lessmann and Seidel (2017), Neves (2016) concludes that in the higher phase of economic development the Kuznets inverted U curve will take N shape.The effect of income inequality on economic growth is different due to the level of economic development, government policies, and region’s capabilities. Methods and Material Regional Inequality is estimated by different methods. Williamson (1955) and Theil’s (1965) indices selected to estimate regional income inequalities in Iran’s provinces based on following relationship: In which, CVw is Williamson index and its quantity takes a range between 0 and ∞. yi is province per capita income. is national average per capita income. pi is province population and p is total population. Williamsons index measures inequalities using population shares of each province. we used the models for two specific periods,2000 and 2019. Data gathered from SCI (Statistical center of Iran) and regional statistics.The Theil’s indices have been estimated by following equations (Cowell,2009): in which, n is number of provinces , xi is province per capita income, stands for national per capita, is province income share, log shows variables in logarithm form. Computation is made using current prices. Share of each province in total government expenditure is taken as an indicator of resources allocation mechanism in order to estimate inequality and changes their in. Results and Discussion The result, based on Theil’s indices is shown in table below:Theil’s Inequality indices calculated for Iran, in2000 and 2019ProvincesProvince-wise disbursement of Government ExpenditurechangesTheils Indices in :20002019Arak1.82-0.2440.0480.036Gilan3.56-0.4350.0520.029Mazandaran4.22-0.0210.0380.037East Azarbyjan4.810.3130.0390.051west Azarbyjan3.670.1670.0320.037Kermanshah3.19-0.2330.0330.026Khuzestan6.99-0.3970.1250.076Fars7.26-0.2420.0740.056Kerman4.590.0820.0520.056Khorasan Razavi8.16-0.4240.1040.060Isfahan5.42-0.2400.0940.071Hormozgan3.04-0.2060.0590.047Sistan and Baluchistan4.07-0.2240.0330.026Kurdistan2.54-0.0610.0200.018Hamadan2.660.0780.0220.023Lorestan2.630.0650.0200.021Ilam1.47-0.2630.0160.012Zanjan1.790.0960.0240.026Chaharmahal and Bakhteyari1.79-0.0220.0150.015 Theil’s Inequality indices calculated for Iran, in2000 and 2019ProvincesProvince-wise disbursement of Government ExpenditurechangesTheils Indices in :20002019Kohgiluyeh and Boyerahmad1.47-0.0650.0130.012Semnan1.48-0.3790.0270.017Yazd1.95-0.0800.0390.036Bushehr2.13-0.3170.0620.042Tehran6.680.6410.0970.160Ardabil1.88-0.0110.0200.019Qom1.80-0.3610.0210.014Qazvin1.71-0.4820.0540.028Golestan2.350.0330.0200.020Khorasan shomali1.572.3680.0030.011Khorasan Jonobi1.661.0240.0060.013Alborz1.650.1720.0340.039Total100-0.1241.2961.135Reference: Author’s calculation Based on our findings, the inequality between two periods under study (2000 - 2019) has decreased from 1.296 to 1.136. In some province Theil’s coefficient of inequality has increased (e.g., East Azarbyjan, west Azarbyjan, Kerman, Hamadan, Lorestan, Zanjan, Tehran, Golestan, Khorasan Shomali and Khorasan Jonobi). Tehran has experienced minimum inequality changes between two periods. But Qazvin, Gilan and Khorasan Razavi have experienced maximum changes in inequality index over the same period compared to other provinces Conclusion In Iran, Government regional resource allocation through budget provisions has affected provinces differently in terms of inequality over the specified period. Each current and capital government expenditure allocated to provinces, has affected them differently due to privilege bargaining power enjoyed by some provinces and other relevant issues involved. Endogenous factors such as local and regional investment, local incentives, entrepreneurship, stability and managerial capacities as complementary elements have played an important role in decreasing regional inequality.
Welfare, poverty and income distribution
Hamed Ahmadi; Mohammad Reza Behboudi
Abstract
The Targeted Subsidies Policy (TSP) was implemented as one of the biggest economic reforms in Iran in 2009. However, after more than a decade, it did not achieve all its predetermined goals. Regardless of its positive effects, this research aims to identify and determine the adverse effects of this plan ...
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The Targeted Subsidies Policy (TSP) was implemented as one of the biggest economic reforms in Iran in 2009. However, after more than a decade, it did not achieve all its predetermined goals. Regardless of its positive effects, this research aims to identify and determine the adverse effects of this plan after its implementation, which led to the inefficiency of TSP. This research is based on Sandelowski & Barroso Meta-Synthesis method in which, by searching keywords related to the topic in scientific databases, the relevant researches were found and systematically reviewed. The search results were filtered by reviewing titles, abstracts, and content, and screened articles were evaluated using the CASP tool. Finally, 86 sources were selected and analyzed. By coding and categorizing the articles, nine main categories were identified as disadvantages and negative effects of TSP: negative effects on macroeconomics, negative effects on the production sector, unfair distribution, decreased welfare, failure to save or reduce energy consumption, energy smuggling and corruption, adverse effects on medicine and health, adverse effects on transportation, and adverse environmental effects. The findings can help to structurally reform the current method and prevent the repetition of past mistakes. Introduction The government pursues three main goals in paying subsidies, which include the optimal allocation of resources, economic stability, and fair income distribution. The inefficiency and unfairness of subsidy payment in Iran for many years have caused the government to implement the Targeted Subsidies Policy (TSP) in 2009. Several goals and justifications were proposed, including: 1) making the distribution system fair, 2) increasing economic efficiency, 3) creating more welfare effects of cash subsidy, 4) reducing the smuggling, 5) reducing government expenses, 6) ensuring transparency of cash subsidy, 7) protecting environmental.In the implementation process of TSP, policymakers followed two basic axes by making the energy prices real (market price). First, limited monthly quotas were allocated to each car with subsidized petrol pricing. Second, cash subsidy payments were made to households to improve income distribution. However, in practice, the intended goals failed to materialize and led to inefficient allocation of resources and market deviation.Previous research has focused on the implementation of TSP and has only studied specific aspects. Therefore, this research aims to identify the adverse effects of the implementation of TSP in various fields through conducting a systematic review with a meta-synthesis approach. It will clarify all negative effects and causes of its inefficiency. Methods and MaterialThis qualitative research, which utilized content analysis, is based on Sandelowski & Barroso's Meta-Synthesis method. The figure below briefly depicts its steps: First, sources were reviewed with the following criteria: geographical scope (Iran), language (English and Farsi), period (2010 to 2022), study method (qualitative, quantitative, mixed), analysis unit/society (all available resources regarding the implementation of the TSP), conditions of the study (evaluation of the effects of the implementation of the TSP), and type of resources (articles published in journals and conferences, news and interviews, and official analytical reports).Next, resources were systematically searched based on related keywords in different sources. Finally, 486 articles (403 Persian articles and 83 English articles) were found. After a detailed review of titles, abstracts, content, and research method in line with the research question and purpose, 112 articles were selected. By using the Critical Appraisal Skills Program (CASP) tool to evaluate the quality, 86 sources were used as the basis for this research.In the process of data analysis, 538 codes were identified and categorized into 46 sub-categories. By using the concepts of these codes, the adverse effects of the implementation of the TSP were identified in nine categories. The Kappa index was used to control the quality of the study, which was accepted due to the coefficient (0.733). Finding and Discussion Based on the frequency of findings (codes) in the analyzed sources, the identified categories are as follows: (1) negative effects on macroeconomics, (2) negative effects on the production sector, (3) unfair distribution, (4) decreased welfare, (5) failure to reduce energy consumption, even increase it (6) energy smuggling and corruption, (7) adverse effects on medicine and health, (8) adverse effects on transportation, and (9) adverse environmental effects (see Figure 1). The main reasons for the occurrence of these adverse effects, which led to inefficiency and failure to achieve the predetermined goal of TSP are as follows:The government's inability to accurately identify the target groups for the subsidy caused a waste of resources and even a deficit in the government's budget.Failure to increase the price of energy carriers in line with inflation has caused destructive effects.Allocation of petrol subsidy to cars, while low-income people mostly do not have any car.Payment of cash subsidy to all people, without having a significant effect on welfare, causes an increase in liquidity and waste of resources, and serious damage to the country's economic system.5.Failure to pay the share of the sectors mentioned in the law, such as production, health, and modernization of the transportation fleet, due to budget deficits.Due to political priorities, governments do not want to change the method of implementing this policy. Conclusion To provide an integrated and comprehensive view of the adverse effects of implementing the TSP after 12 years, this study analyzed all research conducted in this respect. The results of this meta-synthesis research showed nine main adverse effects of the implementation of the TSP. Based on the findings of the study and the suggestions made in the reviewed research, some practical solutions are suggested.The government's inability to accurately identify target groups is a structural weakness, and it is necessary to assume the impossibility of categorizing people's income levels. Therefore, to present an executive solution currently, it is necessary to allocate subsidies to people instead of cars so that people without vehicles can also benefit. In addition, the price of energy carriers should float and close to its global price.The government must stop the cash subsidy payment and replace it with other supporting methods. By setting energy pieces at the global leverl, government support payments to the public service sectors (mentioned in the law) can be guaranteed. Furthermore, reforming the country's economic structure in the long term should be prioritized instead of considering short-term political goals that are often propaganda.In conclusion, this study reveals that the implementation of TSP has resulted in numerous adverse effects on various sectors of Iran's economy and society. The identified reasons for these negative impacts can help policymakers to reform the current subsidy distribution system and prevent the repetition of past mistakes.
Welfare, poverty and income distribution
Fatemeh Bazzazan
Abstract
Poverty is a global issue of high importance for both developing and developed countries. The first step in tackling poverty is to identify the impact of economic policies on poverty indicators. In this direction, the purpose of this study is to measure the effect of foreign tourism development on poverty ...
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Poverty is a global issue of high importance for both developing and developed countries. The first step in tackling poverty is to identify the impact of economic policies on poverty indicators. In this direction, the purpose of this study is to measure the effect of foreign tourism development on poverty reduction using SAM fixed price multiplier approach. For this purpose, 2011 SAM, 2018 foreign tourist receipts, and three poverty indicators: head count ratio, poverty gap, and (FGT) have been considered. The results indicate that the arrival of foreign tourists through the production growth channel reduces poverty in Iran and reducing poverty of rural households is greater than urban households. Results also show that the highest share in sectoral poverty reduction based on the three poverty indicators is related to the agricultural sector (based on the census poverty index), hotels and restaurants, and manufacturing, and transportation (based on the poverty gap index and the FGT indices). Whereas the least reduction in poverty occurs in the financial, insurance and education activities. Any policy making in the direction of tourism development is considered as a suitable socio-economic achievement.
Welfare, poverty and income distribution
Cirous Omidvar
Abstract
Given the importance of Rawls and Nozick as two prominent philosophers from left and right wing of liberalism, in this paper a comparative root-seeking evaluation about their distributive justice theories is presented. By using the idea of explanation of expectations from a distributive justice theory ...
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Given the importance of Rawls and Nozick as two prominent philosophers from left and right wing of liberalism, in this paper a comparative root-seeking evaluation about their distributive justice theories is presented. By using the idea of explanation of expectations from a distributive justice theory based on a problem-oriented approach, through a step by step root-seeking process, philosophical foundations of distributive justice theories of these two philosophers were identified. Then on the basis of internal and external consistency criteria, these foundations and theories were evaluated. The results of study are as follows: while Rawls founded his theory and particularly difference principle on the Kantian foundations which was the target of Nozick’ criticism; Nozick Which besides Kant, was under influence of Locke, founded his theory on the existence of a kind of natural law. Also while Kant and Locke, each in some way, harmonized their own value foundations with divine anthropological and epistemological foundations, Rawls harmonized it with this anthropological foundation that there exists a common sense of justice in humans, without mentioning the material or divine source of this moral sense. In contrast, Nozick harmonized value foundation of his theory with a kind of natural law; a godlike natural law that by determining the initial distribution of natural endowments, was determinant factor of entitlement of each individual; a distribution that Rawls even didn’t permit the use of just or unjust adjective about it.
