Analysis and Projection of Income Distribution in Urban and Rural Areas of Iran for 2025 Vision

In view of the direct relationship that exists between fair income distribution and such important macroeconomic variables as productivity and economic growth, fair income distribution has emerged as one of the most important macroeconomic goals of countries.This paper first uses Particles Swarm Optimization (PSO) algorithm to estimate rural and urban Gini coefficients in the period of 1971-2008, in the form of linear and exponentials functions. Then, based on the existing criteria, the best estimation model is chosen. Finally, the selected model is used to project the amount of Gini coefficient for urban and rural areas under various scenarios up to 2025. In this study, Gini coefficient is considered a function of gross domestic product (GDP), inflation rate, unemployment, size of government and the Human Development Index (HDI). Findings show that the exponential model illustrates rural and urban Gini coefficients with higher accuracy. By increasing GDP and HDI and decreasing the rates of inflation and unemployment, and the size of government in the selected model, one can observe improvement in the income distribution in urban and rural areas of Iran by the end of 20-Year Perspective Plan in 2025.