The effect of the factors affecting the size of government in the provinces of Iran

The determination of factors affecting government expenditure has been raised in the economy of public sector from the long ago. Adolf Wagner (1967)، the German economist has studied the growth of public sector of some European countries، the United States and Japan، and his theory is based on these experiences. Based on the theory، by increasing income in these countries، the government expenditure has increased more. Most of the studies conducted on the Wagner theory have been at the macro-level for Iran or between country، and only one study has been done in provinces of the country by cross section data for 1994. In this study، it is tried the impact of the economy size (income and per capita income) on the size of the government (government expenditure، government expenditure relative to income and per capita government expenditure) in the form of Four Alternative Specification of the Wagner''s hypothesis for the provinces of Iran in 2001-2012 are to taken into account using the panel data. For this purpose، the effect of income، population density، the urbanization rate and the unemployment rate are examined on the size of the government. The results indicate the acceptance of Wagner’s law in provinces of Iran.