The Impact of Economic growth and Institutional quality on Income inequality in Iran

Articles in Press

Authors

1 economic

2 Phd Economic

3 Economic

4 phd Economic

10.30471/jee.2025.11336.2546

Abstract

This study examines the impact of economic growth and institutional quality on income inequality in Iran during the period 2008-2024 using vector autoregressive (VAR) and DSGE-VAR models. Using historical data, impulse analyses, financial cumulative coefficient, and historical analysis show that income inequality, as measured by the Gini index, has been remarkably resilient to financial and economic shocks. Although GDP growth has been the main driver in some periods, it has had a limited impact on reducing income inequality due to structural instabilities and external shocks. Institutional quality, including corruption control and government effectiveness, experiences severe fluctuations. While democracy and human capital have the potential to reduce inequality, they have not been fully realized due to structural constraints. Life expectancy has had a weak relationship with income inequality. The analysis suggests that uncoordinated fiscal policies and external shocks have played an important role in exacerbating income inequality. Finally, the study emphasizes the need for institutional reforms, investment in human capital, and coordination of economic policies to reduce income inequality and achieve sustainable growth.

Keywords

Journal of Economic Essays: an Islamic Approach

Articles in Press, Accepted Manuscript
Available Online from 09 December 2025

Files

Share

How to cite

Statistics