Analysis of Poverty and Welfare Changes of Rural Iran

Improving economic welfare of people and poverty reduction is one of the main goals in economic development plans in all nations. Direct payment or distribution of subsidized commodities is the most well-know way of transferring income to low income groups of society, having long run precedence in both of developing and developed nations. However, due to government limited budget using the subsidies efficiently and leading it toward target groups (the poor) is important. Approaching a way to determine the target groups simply and low costly may be regarded as increment in efficiency of poor-supporting system. The under consideration topic in developing poverty reduction plans is to determine the poor characteristics precisely and to take antipoverty measures accompanied with location oriented policies. Based on the above spokes, this study tries to determine socioeconomic characteristics affecting poverty throughout rural households of Iran. In addition, the welfare changes of rural households was analyzed using real per capita consumption expenditure changes over 2000-2002. In order to analyze the poor characteristics, under poverty line households were recognized using FGT criteria in 2002, then being or not being as poor household was applied as a function of socioeconomic characteristics, 1 for the poor households and 0 for others. The socioeconomics variables are household head’s age, gender, education level and occupation, square of household size, agricultural income, non agricultural income, number of educated individuals, number of occupied individuals, and location variable of province. Logit model was used to analyze the mentioned variables effect on poverty. The data was obtained from Household Survey, conducted by Statistical Center of Iran annually.The sampling method was two-stage random selection. In first stage the provinces including Markazi, Khorasan, Isfahan, Golestan, and Ardabil were selected by cluster classifying, and then the households were selected throughout the provinces randomly. The provinces were also classified based on their per capita expenditure.Findings & Based on the findings, food materials and tobacco with 40% has the highest expenditure share in households’ expenditures and is followed by housing. We also found increased average per capita expenditure in 1382 compared to 1379 throughout all income deciles. Based on the FGT criteria about 79.8% and 45.8% of individuals were regarded as poor in 1379 and 1382 respectively. The estimation results of factors affecting poverty showed that increment in head age, percentage of families headed by men, agricultural monetary and non-monetary revenue, having household heads occupied in agronomy and animal husbandry and education level of household head rise probability of coming up the poverty line, while increase in household size may result in decreased welfare. It was also revealed that there are local differences in rural regions.