Relationship between Growth and Income Distribution - In Rural Areas of Iran With Spatial Panel Approach

Subject Areas : Agricultural Economics Research

fazel ghobaishavi ¹ , Ahmad Akbari ² , Amir Dadrasmoghadam ³ , Mahdi Safdari ⁴ , Ali Sardar Shahraki ⁵

1 - Ph.D. Student, Department of Agricultural Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran.
2 - Professor, Department of Agricultural Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran. Sistan and Baluchestan University, Zahedan, Iran
3 - Assistant Professor, Department of Agricultural Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran.
4 - Associate Professor, Department of Agricultural Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran.
5 - Associate Professor, Department of Agricultural Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran.

Received: 2021-07-19 Accepted : 2022-05-28 Published : 2023-04-21

Keywords: rural areas, Economic Growth, income inequality, spatial panel, Kuznets curve,

Abstract :

Introduction: Considering the effect of income distribution on poverty and economic well-being of villagers, knowledge of the factors affecting how income is distributed in rural areas of the country will be necessary to formulate poverty alleviation policies. Economic growth is recognized as one of the factors influencing the income distribution pattern. Materials and Methods: In this study, using composite data in the Kuznets hypothesis curve, the relationship between economic growth and income inequality in rural areas of Iran has been investigated using the Spatial panel approach during the period 2011-2019. Findings: The results of the study indicate the existence of spatial over, so that in this study the effect of spatial economic growth (GDP per capita) is a positive and significant relationship with the rural Gini coefficient in the provinces of Iran. However, the effect of the Spatial over of the economic growth space of the agricultural sector (value added of the agricultural sector) has had a negative and significant effect on the rural Gini coefficient in the provinces of Iran. The results also show that there is an inverse U-shaped relationship between agricultural sector growth and income distribution. Therefore, Kuznets hypothesis is confirmed in rural areas of Iran. Conclusion: It is suggested that given that economic growth has not been justice-oriented and poor growth based on the distribution of incomes in rural areas of the provinces, in order to improve income distribution in rural areas of the country, economic policies should be in line with accelerating the growth of agriculture.

References:

1- Abrishami H, Khatabakhsh P. Examine the Relationship between Growth and Income Dis‌tribution in Iran. Journal of Humanities and Social Sciences,2008, 17, 53-13.

2- Andrade Araujo J, Cabral J. The Relationship Between Income Inequality and Economic Growth in Brazil: 1995-2012. Problemas del desarrollo, 2015, 46(180), 129-150.

3- Arbia G, Piras G. Convergence in per-capita GDP across European regions using panel data models extended to spatial autocorrelation effects.  2005.

4- Bakhtiari S, Friaders V. The relationship between economic growth, income distribution and poverty in rural areas of Iran. Journal of Agricultural Economics and Development, 2014, 87, 88-69.

5- Blanco G, Ram R. Level of development and income inequality in the United States: Kuznets hypothesis revisited once again. Economic Modelling, 2019, 80, 400-406.

6- Chen A. Reducing China's regional disparities: Is there a growth cost? China Economic Review, 2010, 21(1), 2-13.

7- Devarajan S, Swaroop V, Zou Hf. The composition of public expenditure and economic growth. Journal of monetary economics, 1996, 37(2), 313-344.

8- Gujarati, D. (2004). Basic Econometrics-Damodar N. Gujarati: McGraw− Hill.

9- Heidari H, Hassanzadeh A. Investigating the Relationship between Income Inequality and Economic Growth in Iran. Journal of Social Welfare Research, 2017, 63, 125-189.

10- Jalali, M. (2007). Analysis and Estimation of Gini coefficient in Iran. Journal of Economic Research, 36(12), 115-134.

11- Kakwani N, Khandker S, Son H. Pro Poor Growth Strategies in Africa: Poverty Equivalent Growth Rates with applications to Korea and Thailand. Paper presented at the Economic Commission for Africa, Economic Policy Research Center, Expert Group Meeting, June. 2003.

12- Khaledi K, Sadr alSharifi S. Investigating   the Relationship  between Economic  Growth of the Agricultural Sector  and  the Distribution of Income in Rural Areas of Iran. Journal of Agricultural Sciences, 2005, 11, 25-39.

13- Khaledi, K., & Permeh, Z. (2004). Analysis poverty  in urban and rural areas of Iran's . Journal of Agricultural Sciences, 49(13), 25-39.

14- Kuznets S. Economic growth and income inequality. The American economic review, 1955, 45(1), 1-28.

15- Lee, Smith R. Growth and Convergence in Multi Country Empirical Stochastic Solow Model. Journal of applied Econometrics, 2013, 12, 357-392.

16- Lee K, Pesaran MH, Smith R. Growth and convergence in a multi‐country empirical stochastic Solow model. Journal of applied Econometrics, 1997, 12(4), 357-392.

17- Lyubimov I. Income inequality revisited 60 years later: Piketty vs Kuznets. Russian Journal of Economics, 2017, 3(1), 42-53.

18- Mamipour S, Rezaei A. Economic Growth and Regional Labour Market Development in Iran's Provinces: Okun’s Law in a Spatial Context. Quarterly Journal of Economic Growth and Development Research, 2018, 8(31), 107-122.

19- Manjzab RM, Nosrati R. Basics of econometrics with Ivyus and Stata. Tehran: Kind Publications. 2018.

20- Mehrgan N, Musaee M, Kayhani R. Economic Growth and Income Distribution in Iran. Journal of Social Welfare Research,2008, 28, 77-57.

21- Oshima HT. The international comparison of size distribution of family incomes with special reference to Asia. The Review of Economics and Statistics, 1962,  439-445.

22- Panizza U. Income inequality and economic growth: Evidence from American data. Journal of Economic Growth, 2002, 7(1), 25-41.

23- Pede VO, Sparks AH, McKinley JD. Regional income inequality and economic growth: a spatial econometrics analysis for provinces in the Philippines. 2012, Retrieved from

24- Sadeghi H, Mehrgan N. Economic growth in agriculture and distribution income. Quarterly Journal of Agricultural Economics and Development. Journal of Agricultural Economics and Development, 2000, 41, 57-70.

25- Timmer C. Agriculture and Economic Growth in Vietnam. Journalof Agricultural Economics, 2000, 11, 1-34.

26- Todaro MP, Smith SC. Economic Development 9th edition Addison Wesley.

27- Viton PA. Notes on spatial econometric models. City and regional planning, 2005, 870, 2-17.

28- Weriemmi M, Ehrhart C. Inequality and growth in a context of commercial openness, Theoretical analysis and empirical study: The case of the countries around the Mediterranean basin. University of nice-Sophia antipolice.  2004.

29- Zaman K, Khilji BA. Retraction notice to" The relationship between growth and poverty in forecasting framework: Pakistan's future in the year 2035"[Econ. Model. 2015, 30 ,20,13, 468-491]. Economic Modelling, 100(45), 286.