Investigation of Effective Factors on Agricultural Labor Productivity, Income Distribution and Poverty in Rural Areas of Iran

Growth of agricultural sector could reduce rural poverty by labor productivity improvement in parallel with balanced income distribution. Increase in productivity depends on many factors such as investment, education and skills of labor and infrastructure, in turn. In this study, factors affecting agricultural labor productivity, income distribution and poverty in rural areas of Iran were explained through simultaneous system of equation for period of 1981-2007. The results indicated that spending on education and research, literacy rate, spending on electricity supplying and capital stock would lead to increase in productivity of agricultural labor; and this growth, in addition to the investments on rural industries and infrastructural spending, would improve income distribution and finally reduce rural poverty. The results of this study suggest that expenditure of infrastructure, rural electrification, road construction, rural health centers and investment in rural industries should be increased.