The Effect of Prices Changes on Income and Welfare Distribution in Urban Areas

The purpose of this paper is to study the effect of price changes on the distribution of income and social welfare in Iranian urban areas during 1991-2011. To get the end، a linear expenditure system is estimated by the use of budget data in urban households to obtain the Engel coefficients for 12 good groups estimating seemingly unrelated regressions. Equivalent Income Index is calculated for 10 cost deciles based on what Atkinson’s inequality measure and social welfare index is calculated. The results represent that income inequality of urban households has been increased during the periods of high inflation، while social welfare has experienced a decreased growth. Meanwhile، it is clear that a remarkable part of social welfare changes is aroused by the changes of household''s private welfare.