Iranian living standards in times of high inflation
The Iranian year 1401 (2022/2023) was exceptional in several respects. It was the first full year of President Ebrahim Raisi’s administration (August 5, 2021 to present), which proposed a new revolutionary vision that at long last would fulfill the promises of the 1979 revolution. It was also the year that the currency fell precipitously, by 52%, and prices registered a record rate of increase (300% annual rate in June 2022). The rapid increase of prices in the early part of the year, a result of the removal of food subsidies and the Russian invasion of Ukraine, raised fears of hyperinflation, which turned out to be highly exaggerated, as inflation moderated and settled at 45% for the year. Critics of the hardline president predicted that Raisi’s economic policies was severely hurting the poor and the middle class. We finally have the data to find out if they were right.
(more…)Rising poverty and falling living standards in Iran in 2020
The Statistical Center of Iran (SCI) has released the micro data from its most recent annual Household Expenditure and Income Survey (HEIS) for the Iranian year 1399 (21 March 2020 to 20 March 2021). The results do not surprise — the downward slide in living standards and the rise in poverty that started a decade ago continues. Along with the more positive news on the GDP and employment front that have become available in the last few weeks, the survey offers a relatively accurate if mixed picture of a country and a people struggling under the Trump-Biden maximum pressure campaign. Relative to household welfare, the economy is doing better. GDP grew by 3.6% last year and last quarter (spring 2021) 200,000 more people were working compared to a year ago. This makes perfect sense since falling real wages that are hurting welfare are good for employment and production.
(more…)Does economic growth in Iran increase income inequality?
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…)
Trends in poverty and income inequality and Iran election debate
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?
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
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
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?
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
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.
Reading Piketty in Tehran
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…)
Tyranny of numbers 
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