Evaluating Mutual Impacts of Agricultural Growth and Inequality in Iran's Rural Area Divided to Provinces with Amenity and Deprived: Simultaneous Equations of Panel Data Approach

Document Type : Original Article

Author

Payame Noor University

Abstract

Purpose- Income distribution inequity in low-income societies spreads poverty faster therefore it is essential to indicate the relation between economic growth and income distribution in low-income societies like rural societies which gain income through agricultural activities. On the other hand, recent studies show that societies amenity or deprivation is effective on the relation between growth and income distribution. So, the aim of this study is to indicate the relation between rural income distribution and Iran agricultural sector growth dividing to regions with amenity or deprived.
Design/methodology/approach - Due to economic literature income distribution and economic growth has interactional effect on each other and the relation between them is different in regions with amenity and deprived. To explain the relation between rural income distribution and agricultural sector growth in this study two equations are introduced, the first equation analyzes the effective factors on agricultural sector growth and the second equation examine the factors determining rural income inequality. These equations are estimated by provincial data divided to regions with amenity and deprived during 2008-2016 and simultaneous equations approach of panel data is used.
Finding-The results show that, in low amenity and deprived provinces agricultural sector growth reduces the inequality while agricultural sector growth has no significant effect on inequality in provinces with amenity. Also, inequality increase lead to economic growth in deprived regions, but in regions with amenity the effect of inequality on growth is not significant. Besides, the results of estimation imply that government's expenditure in provinces increase rural income inequality and development expenditure only in deprived and low amenity provinces cause rural income inequality decrease and in other rural is not significant on inequality index.
Practical implications- Based on the results of this study and in order to reduce rural income inequality and the growth of agricultural sector, it is necessary to consider the distribution of public facilities and infrastructure in order to enjoy deprived and low amenity rural regions.

Keywords

References

  1. Abounoori, A.A., Mofateh, S., & Gashtihadi, P. (2011). Comparative study in urban and rural areas. Journal of Financial Economics, 5(13), 77-96. [In Persian] https://www.sid.ir/En/Journal/ViewPaper.aspx?ID=332352
  2. Abounoori, E., & Farahati, M. (2016). The Structure of production and income distribution in Iran. Quarterly Journal of Economic Modeling, 9 (32), 1-23. [In Persian] http://eco.iaufb.ac.ir/article_561037.html
  3. Agenor, P.R., & Blanca, M.D. (2006). Public infrastructure and growth: new channels and policy implications. World Bank Policy Research Working Paper 4064. November https:// openknowledge. worldbank. org/handle/10986/8880
  4. Aghion, P., Caroli, E., & Garcia-Penalosa, C. (1999). Inequality and economic growth; the perspective of the new growth theories. Journal of Economic Literature, 37(4), 1615-1660. https://www.aeaweb.org/articles?id=10.1257/jel.37.4.1615
  5. Alesina, A., & Perotti, R. (1996). Income distribution, political instability, and investment. European Economic Review, 40, 1202-1229. https://www.sciencedirect.com/science/article/pii/00142921 95000305
  6. Badri, S. A., & Akbarian Ronizi, S. R. (2006). The comparative study on application of assessment methods of the development in the regional studies the case: Esfarayen County. Geography and Development Iranian Journal, 4(7), 5-22. [In Persian] https://gdij.usb.ac.ir/article_3797.html
  7. Balestra, P., & Varadharajan-Krishnakumar, J. (1987). Full information estimations of a system of simultaneous equations with error component structure. Econometric Theory, 3(2), 223-246. DOI: https://doi.org/10.1017/S0266466600010318
  8. Baltagi, B. H. (2005). Econometric analysis of panel data (3th ). New York: John Wiley, and Sons.
  9. Calderon, & Chong, A. (2004). Volume and quality of infrastructure and the distribution of income: An empirical investigation. Review of Income and Wealth, 50, 87-105. https://econpapers.repec.org/article/blarevinw/v_3a50_3ay_3a2004_3ai_3a1_3ap_3a87-106.htm
  10. Calderon, & Serven L. (2003). Macroeconomic dimensions of infrastructure in Latin America. Presented at the Fourth Annual Stanford Conference on Latin American Economic Development
  11. Dastidar, A. Gh. (2012). Income distribution and structural transformation: Empirical evidence from developed and developing countries. Seoul Journal of Economics, 25(1), 25-56. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2020903
  12. Estache, A., Fostor, V., & Wodon, Q. (2002). Accounting for poverty in infrastructure reform-learning from Latin America’s experience. Washington, D.C: World Bank Institute. https://doi.org/10.1596/0-8213-5039-0.
  13. Fan, S., Zhang, L., & Zhang, X. (2002). Growth, inequality, and poverty in rural China. https://EconPapers.repec.org/RePEc:fpr:resrep:125
  14. Fleisher, B., H. Li., & M. Q. Zhao. (2010). Human capital, economic growth, and regional inequality in China. Journal of Development Economics, 92(2), 215–231. https://doi.org/10.1016/j.jdeveco.2009.01.010
  15. Gannon, C., & Liu, Z. (1997). Poverty and transport. Washington, DC: The World Bank, Mimeo. https://www.researchgate.net/publication/326763877_Poverty_and_Transport
  16. Ghadir-Masoum, M., & Habibi, K. (2003). Measuring and analyzing development in the cities and counties of the Golestan Province. Annually Nameh-Ye Olum-e Ejtemai, 11(3), 147-170. [In Persian] https://jnoe.ut.ac.ir/article_10547.html
  17. Hasani Sadrabadi, M. (1999). Investigating the relationship between economic growth and income distribution in Iran. M.A. Thesis, Tarbiat Moalem University. [In Persian]
  18. Jacoby, H. (2000). Access to Rural Markets and the Benefits of Rural Roads. The Economic Journal, 110, 713-37. https://www.jstor.org/stable/2565923
  19. Jorjorzade, A., & Eghbali, A. (2005). An Investigation about the effect of oil income on income distribution in Iran. Social Welfare Quarterly, 5(17), 207-226. [In Persian] https://refahj.uswr.ac.ir/browse.php?a_id=2119&sid=1&slc_lang=en
  20. Kahya, M. (2012). Structural change, income distribution and poverty in ASEAN-4 countries. School of Economics and Management, LUND University. http://lup.lub.lu.se › luur › download
  21. Karami, E.A., Nasrabadi, A., & Rezai Moghaddam, K. (2000). The consequence of sprinkler irrigation diffusion on the rural poverty and inequalities. Quarterly Eqtesad-e Keshavarzi va Towse’e, 8(3), 163-186. [In Persian] https://www.sid.ir/fa/journal/ViewPaper.aspx?id=35849
  22. Kazerooni, A., Asgharpur, H., & Tayyebi, S. (2020). The impact of slow economic growth on inequality of income distribution with emphasis on Thomas Piketty's Hypothesis. QJER, 20 (1), 50-23. [In Persian]URL: http://ecor.modares.ac.ir/article-18-21565-fa.html
  23. Khaledi, K., & Haghighatnezhad Shirazi, A. (2012). The Relationship between natural resource abundance and poverty in Iran. Social Welfare Quarterly, 12(46), 65-91. [In Persian] https://refahj.uswr.ac.ir/browse.php?mag_id=45&slc_lang=fa&sid=1
  24. Khaledi, K., & Sadr-Alashrafi, S.M. (2005). Study the relationship between growth rate of agriculture sector and income distribution in rural area of Iran. Quarterly Journal of Agricultural Sciences, 11(2), 25-40. [In Persian] https://www.sid.ir/fa/JOURNAL/ViewPaper.aspx?id=46330
  25. Khaledi, K., Yazdani, S., & Haghighatnezhad Shirazi, A. (2009). The effect of agriculture investment on rural poverty alleviation in Iran. Iranian Journal of Economic Research, 11(35), 205-228 https://ijer.atu.ac.ir/article_3604.html
  26. Khanzadi, A., Heidarian, M., &  Moradi, S. (2015). Analyzing the role and impacts of tax revenues on income distribution and human development (A case study of Iran). Quarterly Journal of Quantitative Economics, 11(4),135-158. [In Persian] https://jqe.scu.ac.ir/article_11876.html?lang=en
  27. Kuznets, S. (1955). Economic growth and income inequality. American Review, 45, 1, 1-28. https://www.jstor.org/stable/1811581
  28. López, H. (2003). Macroeconomics and inequality, the World Bank Research Workshop, Macroeconomic challenges in Low-Income Countries, October 23-24. https://www.imf.org/external/np/res/seminars/2003/lic/pdf/hl.pdf
  29. Mehrara, M., & Esfahani, P. (2016). the relationship between income distribution and tax structure in the selected countries. Journal of Tax Research, 23(28), 209-228. [In Persian] https://taxjournal.ir/browse.php?mag_id=78&slc_lang=fa&sid=1
  30. Moinoddini, Z. (2014). Related to agricultural research, distribution of income and agricultural value International Journal of Agricultural Management and Development, 5(2), 101-107. [In Persian] https://dx.doi.org/10.5455/ijamd.158980 & https://iranjournals.nlai.ir/handle/123456789/345560
  31. Murphy, K. M., Shleifer, A., & Vishny, R. W. (1989). Income distribution, market size, and industrialization. Quarterly Journal of Economics, 104(3), 537-564. https://scholar.harvard.edu/shleifer/publications/income-distribution-market-size-and-industrialization
  32. Myrdal, G. (1973). Growth and social justice. World development, 1(3-4), 119-120. https://ideas.repec.org/a/eee/wdevel/v1y1973i3-4p119-120.html
  33. Nademi, Y., &  Hasanvand, D. (2015). The Threshold effects of government size on income inequality in Iran. The Journal of Planning and Budgeting, 20(3), 125-143. [In Persian] https://jpbud.ir/browse.php?mag_id=124&slc_lang=fa&sid=1
  34. Piraee, K., & Ghana'atian, A. (2007). The effect of economic growth on poverty and income inequality: measurement of pro-poor growth in urban and rural areas of Iran. Iranian Journal of Economic and Research, 8(29), 113- [In Persian] https://ijer.atu.ac.ir/article_3676.html?lang=en
  35. Pourmokhtar, E., & Moghaddas, P. (2017). The Relationship between Monetary Policies and Farmers’ Welfare to Reduce Poverty in Iran. Journal of Agricultural Economics and Research, 8(32), 101-126. [In Persian] http://jae.miau.ac.ir/article_2125.html
  36. Rafat, B., & Beykzadeh, S. (2012). Using 2SLS method for analyzing the simultaneous effects of economic integration, employment, and economic growth. Quarterly Journal of Economic Growth and Development Research, 8, 9-22. [In Persian] http://egdr.journals.pnu.ac.ir/article_144.html
  37. Rezaee, A., Hosseinzadeh, D., Faramarzi, A. & Yazdankhah, M. (2014). The impact of government size on income distribution in Iran, The Macro and Strategic Policies, 1(4), 21-36. [In Persian] http:// www. jmsp.ir/ article_6255.html
  38. Rezvani, M.R., & Shahneh, B. (2005). Measuring level of development in rural areas of Iran drawing upon fuzzy logic method. Quarterly Rooata Va Towse’e, 8(3), 1-32. [In Persian] http://rvt.agri-peri.ac.ir/ article_59353.html
  39. Sadr-Naieni-Manochehri, A. (1997). Factors affecting income distribution in Iran. Ph.D. Thesis, Islamic Azad University. [In Persian]
  40. Salami, H. & Ansari, V. (2009). The role of agriculture in job creation and income distribution: A path decomposition analysis, Iranian Journal of Agricultural Economics and Development Research, 2-40 (3), 1-20. [In Persian] https://ijaedr.ut.ac.ir/article_20506.html
  41. Samadi, S. (1999). Decries in poverty, efficiency, and equality in Iran. M.A. thesis, Tehran University. [In Persian]
  42. Seifeepour, R., & Rezaee, M. (2011). An Analysis of the effective factors on income distribution in Iran with the emphasis on taxes. J Tax Res., 19 (10), 121-142. [In Persian] URL: http:/ /taxjournal.ir/ article-1 -100-fa.html
  43. Shaykh-Baygloo, R. (2012). Identifying deprived regions of iran by composite ranking. Quarterly Research and Urban Planning, 2(7), 53-70. [In Persian] http://jupm.miau.ac.ir/article_1533.html
  44. Shirvanian, A.A.R., & Esmaeil, A.A.K. (2009). An investigation of the impact of price changes on rural poverty (Case study: Fars Province). Iranian Journal of Agriculture Economics and Development Research, 40(2), 13-25. [In Persian] https://www.sid.ir/En/Journal/ViewPaper.aspx?ID=178280
  45. Todaro, M. P. (1997). Population growth and economic development: Causes, consequences, and controversies. In M.P. Todaro (Ed.), Reflections on Economic Development: The selected essays of Michael P. Todaro. Aldershot, Hants, Edward Elgar
  46. Torkamani, J., & Jamalimogadam, E. (2006). Effects of government expenditure on poverty reduction in rural areas of Iran. Iranian Journal of Economic Research, 7)25(, 153-174. [In Persian] https:// ijer.atu.ac .ir/article_ 3722.html
  47. Valerio-Mendoza, C.M. (2017). Infrastructure development, income inequality and sustainability, the people's republic of China, ADBI working paper series, No. 713. https://www.adb.org/sites/default/files/publication/239186/adbi-wp713.pdf
  48. Xiaolu, )2006(. Income inequality in China and its influencing factors. Research Paper. UNU-WIDER No. 2006/126. ISBN 9291909106. https://www.wssider.unu.edu/sites/default/files/rp2006-126.pdf
Send comment about this article
CAPTCHA Image

Files

History

  • Receive Date: 08 February 2021
  • Revise Date: 07 July 2021
  • Accept Date: 28 July 2021

Share

How to cite

Statistics