Tyranny of numbers

Does economic growth in Iran increase income inequality?

Posted in General, Inequality by Djavad on January 15, 2018

Inclusive growth is what international organizations recommend these days, and it hard to argue otherwise.  Economic growth is better when rich and poor equally benefit.  Better still, is pro-poor growth, the type that lifts poor people’s incomes more than the rest.  The recent unrest in Iranian cities makes this question timely: was Iran’s recent economic growth following the implementation of the nuclear deal unequal, inclusive, or pro-poor?  Clearly, low-income youth who staged the protests believe that growth has not been inclusive.  Can data verify their sentiments? It turns out they do.  More specifically, the economic growth of 2016, which is the main fruit of Rouhani’s international and domestic policies, does not seem to have reached all social classes equally.    (more…)

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Trends in poverty and income inequality and Iran election debate

Posted in General, Inequality, Poverty by Djavad on May 17, 2017

This is not my first post on poverty and inequality in this blog, but I feel I need to update my previous posts on these topics because of the confusing stuff said about them by the presidential candidates. Thanks to the availability of surveys of household expenditures and incomes, we know quite a bit about both poverty and income inequality, but everyone who uses these data does not come to the same conclusion.  I have read frequently that cash transfers have increased poverty, a claim that challenges common sense and the available evidence. (more…)

Revelations of high CEO pay in Iran: what do they imply about wage inequality?

Posted in Inequality by Djavad on June 23, 2016

The recent revelations of “astronomical” salaries of CEOs and top government officials in Iran, up to 2.4 billion rials per month ($68,000 at the free market exchange rate or $200,000 PPP) have embarrassed and put pressure on the Rouhani government.  But how high are these salaries in light of the wage distribution in Iran and CEO pay elsewhere? (more…)

Long term trends in poverty and inequality in Iran

Posted in Inequality, Poverty by Djavad on March 29, 2016

In my last post I argued that, after two years of improvement, poverty and inequality were on the rise in 2014/15.  In this post I extend the calculation of poverty and inequality measures to the entire period for which survey data are available, 1984/85-2014/15. This  post also updates the results in my 2009 paper published in the Journal of Economic Inequality, which covered the period from before the revolution to 2005.   (more…)

Elections in times of economic crisis

Posted in General, Inequality, Poverty by Djavad on March 13, 2016

In a post that I published earlier this week on the Brookings blog, Future Development, I argued that because Iran’s February 26 parliamentary elections took place at an economically inopportune time the success of the moderate candidates is all the more significant.  In my last post here, written a couple days before the election, I had presented some evidence for the poor state of the economy — loss of industrial jobs and falling living standards since Rouhani’s election in June 2013.  In this post I expand the discussion of living standards, poverty, and inequality in recent years. (more…)

Will Rouhani complete the reform of subsidies?

Posted in General, Inequality, Poverty, Subsidy reform by Djavad on September 9, 2015

In principle, the answer to this question should be yes.  Rouhani’s administration professes to be pro-market and is eager to shift resources from wasteful consumption to economic growth.  What better way to remove energy subsidies and use the proceeds to fund the cash-starved development budget? (more…)

Inequality of income in Iran after subsidy reform: the view from the Palma ratio

Posted in General, Inequality by Djavad on November 29, 2014

A while back a friend asked me if the Palma ratio — the ratio of the incomes of the top 10% to the bottom 40% — is a good indicator of inequality in Iran.  I waited until I had the data for 1392 (2013/2014) to answer his question.  In the meantime, I came across a banner headline in the economics newspaper, Taadol, which read something to this effect: “Subsidy reform deepens inequality.”  The claim itself was nothing new, but the reported Gini indices were: I had not seen anyone report Gini coefficients as high as 0.53 for the post-revolution Iran, and it turns out that they do not exist.

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Reading Piketty in Tehran

Posted in Employment, General, Inequality, Macroeconomy by Djavad on July 11, 2014

If you are someone who pays attention to economic news and have not been hiding in a cave for the past few months, you must have heard of the famous book by the French economist Thomas Piketty, Capital in the Twenty-First Century.  Since its translation was published in English earlier this year, it has sold more than half a million copies, which is astonishing for a book with many tables and charts (a publisher once told me that each chart cuts sales by 10%  — there goes that bit of wisdom).

Last month people were also talking about Piletty’s book in Tehran, and this month’s Mehrnameh, published this week, has a section discussing it, including a short interview by yours truly.   I must confess, as I did to the interviewer, that like most people who have bought the book, so far, I have only read the introduction (I have read, however, many of the book reviews — more pages of reviewes than of the book itself! Read an excellent early review by Branko Milanovic here). (more…)

Inflation and energy price reform in Iran

Posted in General, Inequality, Inflation, Sanctions, Subsidy reform by Djavad on February 19, 2014

The dominant view of the high inflation of the last three years blames it on the subsidy reform. (The latest high profile assertion to this effect came from a piece by Hashem Pesaran and Hadi Salehi Esfahani published by the Fars News Agency, to which Mohammad Ali Farzin, the former head of the subsidy reform program,  responded by claming that only 10% of the inflation was due to the subsidy reform).  Were it not for the fact that blaming energy prices for the destructive inflation of the last three years casts a long shadow over future policy on energy prices, the mere fact that it is wrong would not prompt me to bore the readers of this blog with yet another post on inflation. (more…)

Transfers in kind: learning the old lessons, again

Posted in General, Inequality, Poverty, Subsidy reform by Djavad on February 14, 2014

President Rowhani has received well-deserved high marks in foreign policy for his management of the tough negotiations with P5+1 in Geneva, but his first attempt at dealing with Iran’s broken social protection system does not deserve a passing grade.  I explain this in my latest post at Iran Matters.    The food distribution plan that, according to an editorial in the conservative Keyhan newspaper, “could have been a gesture that the government cares about the poor …  but instead it turned into insult and humiliation.”  

The government seems to have made a hasty decision that transfers in kind are superior to cash, despite evidence to the contrary, as I argued in a recent post here.  Tadbir, which is the motto of Rouhani’s government and translates into prudence and experience in Persian, should include economics research and the experience of other countries.  Are there channels for this type of information to find its way into Iran’s policy circles?