Analysis of Income gaps and wealth distribution in Iran: Piketty Approach

Document Type : Original Article

Authors

1 Ph.D. Student in Economics, Department of Economics, Azad University of Firuzkuh

2 Associate Professor in Economics, Department of Economics, Azad University of Firuzkuh

3 Associate Professor in Math, Department of Math, Azad University of Firuzkuh

4 Associate Professor in Economics, Department of Economics, Alzahra University of Tehran

Abstract

This study aimed to demonstrate the inequality of income and wealth in Iran. Therefore, the effects of income inequality and wealth distribution were modeled from 1390 to 1397 on Piketti's dynamic model and based on the analysis of household budget data for the first time in Iran. The results showed that Piketti's hypotheses are valid for Iran and fifty percent of total household wealth belongs to the tenth decile. Furthermore, high Income-share lead to more saving rate and widen the wealth gap between the top and low deciles. It is worth mentioning that this study results owning to the limitation of data gathered, mainly include real estate capital and omit capital like bonds, gold, foreign currency, stocks, and deposits. Consequently, the obtained results are conservative and including the above-mentioned omitted capital into the model would deteriorate the status of inequality. Undoubtedly, establishing a new capital gains tax system would improve equality.

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