Investigate the Effect of Effective Factors on Income Distribution in Urban Areas of Iran's Provinces

The purpose of this study is to investigate the factors affecting income distribution in urban areas of 30 provinces of Iran during the period 2006-2020. To determine the income distribution index, we use three indices of the Gini coefficient, generalized Gini coefficient with emphasis on the role of the poor, and generalized Gini coefficient with emphasis on the role of the rich. Also, two models have been considered to investigate the factors affecting income distribution. In the first model, the effect of tax rates, government expenditures, GDP per capita, its square and financial development index on income distribution are examined. In the second model, along with other variables, the effect of the ratio of direct and indirect taxes to tax revenues and the ratio of current and development payment to GDP on income distribution are s examined. The distinctive feature of this work, along with a comprehensive study of the factors affecting income distribution, is the use of different indicators of the income distribution. This issue is helped policymakers set of income distribution policies to their goals and priorities for the rich and the poor. The results of this study show that increasing the tax to GDP ratio by emphasizing indirect taxes in urban areas of the provinces has improved income distribution and increasing the ratio of current government expenditures to GDP has worsened income distribution in urban areas. Iranians, especially among the rich. In addition, the separation of the effects of government current and development expenditures shows that despite the adverse effect of current expenditures on income distribution in urban areas, construction expenditures help to improve income distribution in most income distribution deciles. Finally, the results of the present study, while not confirming the Kuznets hypothesis in urban areas of Iran, indicate the positive effect of increasing per capita income on proper income distribution and improving the desired distribution with financial development if there is a relative situation of income distribution.