The Effect of Inflation on Income Distribution and Performance of Compensation Policies

Income distribution is one of the most important economic issues and many researches have been conducted in different countries related to this field. The main objective of this study is investigating the effect of inflation on income distribution and performance of government compensation policies. In order to do so، patterns of effective factors on Gini coefficient and twenty percent share of income have been used. Gini coefficient pattern and effective factors pattern on twenty percent estimated respectively by least of squares (OLS) and seemingly unrelated regression (SUR) methods. According to results of Gini index model estimation f inflation rate، unemployment rate، total government expenditure and ratio of asset portion of the highest 10 percent to the lowest 10 percent have negative effect on inequality and increase of basic goods subsidies and asset portion of lowest 40 percent، inequality would improve inequality. Results of estimated Gini Index model showed the increase of Coefficients of inflation rate، unemployment rate، Subsidies of basic goods and ratio of asset portion of the highest 10 percent to the lowest 10 percent، increase inequality. And increase of asset portion of lowest 40 percent، decrease inequality.