Planning and Budgeting

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The studies show if the wages are assigned by productivity, with wage discrepancy increase, income inequality will be caused by productivity increase. So by estimating total productivity the relation between productivity and income inequality index will be estimated by using econometrics model in Iran during (1974-2009). The results show that not only income inequality has a relation with unemployment and inflation but also has positive relation with total factor productivity (and labor productivity) on the other hand when the share of wage and salary caused by productivity growth increase, the income inequality will increase significantly. According to the positive relation of productivity with wage and salary these results show that productivity increase will cause income inequality by expanding inequality of wage and salary.

Keywords: Income Distribution Inequality, Share of Wage and Salary of Total Income, Total Factor Productivity, Inflation Rate, Unemployment Rate.

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