Document Type : Research Paper
Authors
1 Department of Economics, Faculty of Literatures and Humanities , Ilam UniverSity
2 Asistant Professor in Department of Economics, Faculty of Literature and Humanities, University of ilam, ilam, Iran
3 Associate Professor in Department of Economics, Faculty of economics, Allameh Tabataba'i University, tehran, Iran
Abstract
Abstract
Universal subsidies not only have a limited impact on the welfare of vulnerable groups but also increase government expenditures and primarily benefit high-income groups. Therefore, there is a pressing need to reconsider the subsidy payment method and identify the poor. In this regard, one of the proposed ideas is to regionalize the subsidy system in Iran. Thus, the purpose of this paper is to compare national and regional subsidies targeting at the urban level. To this end, using data from the Urban Household Income and Expenditure Survey in 1401, we calculated the poverty line and poverty indices. Subsequently, urban areas of provinces were classified into eight regions based on these indices using the hierarchical clustering method. Finally, by employing a numerical optimization method, we compared the results of subsidy targeting at the national and regional levels. The results indicate that targeting based on individual and combined characteristics of the most vulnerable groups revealed significant differences at national and regional levels. These differences exist in optimal subsidy amounts, reductions in poverty, efficiency of targeting, and resulting errors. Therefore, even if policymakers want to target specific households based on the same characteristics at both national and regional levels, it is still necessary for payment amounts to vary among different population groups across regions.
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