Impact of Globalization on Iranian Income Inequality

Document Type : Research Paper

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Abstract

Globalization contains desired and undesired consequences, needing for reconnection of these consequences in order to lessen the undesired results and strengthen the desired ones. Regarding the case the main objective of this study was to investigate the effect of globalization on income distribution throughout Iranian households. To get the objective ratios such as trade to GDP, import to GDP, Foreign Direct Investment (FDI) to GDP, and lagged terms of FDI to GDP were used during 1991-2004 as criteria indicating globalization level. Based on the criteria, four equations were estimated for rural and urban households separately. In all estimations the sign of coefficients were found consistent with Kuznets hypothesis. Turning point is found to be between 6800-8540, and 7190-7520 thousand Rials for urban and rural households, respectively. Findings showed that there is no strong evidence indicating positive relation between inequality and globalization.

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