Planning and Budgeting

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In all researches conducted on Iran’s economy, the researchers have paid focal attention to Gini coefficient calculations, its trend analysis and the impact of macroeconomic variables on income distribution. Some have tried Cozentes hypothesis. The shortcomings of the previous studies are in the areas of pinpointing inequality increase or decrease factors (not just their share of the whole inequality) and expressing the causes of inequality reduction over time by means of determining the composing elements. The paper tries to overcome the above- mentioned deficiency. For this purpose, the paper uses Gini coefficient analysis technique by means of income factors recommended by Yao (1997) and information gathered from urban and rural areas in 1991 and 1996. The results show that income distribution inequality was reduced in these years though the causes were different on both urban and rural areas. Inequality increase or decrease factors in urban and rural areas have been different, yet they have not changed over time. According to the conclusions, it is cautiously recommended that special attention be paid to inequality reducing factors in poverty reduction policies in urban and rural areas separately.

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