Marginal Rise in Economic Inequality

Inequality in Iran increased slightly in the last four years due to the effects of the economic meltdown in 2012 and 2013, data released by the Statistical Center of Iran show.

The Gini coefficient, a measure of inequality, rose incrementally from March 2012-13 until March 2016, the SCI data show. During the period, the Gini coefficient climbed from 0.37 to 0.39, though this trend may break this year due to the lifting of sanctions that boosted crude oil sales.

Developed by Italian sociologist Corrado Gini, the coefficient is a measurement of the income distribution of a country’s residents. This number, which ranges between 0 and 1, and is based on residents’ net income, helps define the gap between the rich and the poor, with 0 representing perfect equality and 1 representing perfect inequality.

The SCI’s report, which tracks the Gini coefficient from March 2010 to March 2016, also shows a drop in the coefficient from 0.41 in the 2010-11 fiscal year to 0.37 the year after, IRNA reported.

The drop comes from the former government’s Subsidy Reform Plan, which at first bettered the livelihoods of lower income people, especially in rural areas. However, inflation and economic recession negated those initial effects.

The Iranian government started the plan in 2010 with monstrous costs. Every Iranian was paid an equivalent of $45 each month. The money was to replace lavish subsidies on food and fuel that cost the government a third of Iran’s GDP each year, but ended up costing more. It was, however, executed dreadfully by the government of former president, Mahmoud Ahmadinejad.

Financed by printing money and windfall oil revenues, it quickly led to runaway inflation and currency devaluation. Today the Subsidy Reform Plan sum per person is worth $12.4 and the government still struggles under the burden of payment.

Inequality in rural areas is less than in urban areas. Also, the current 0.39 Gini coefficient is right on its 10-year average for the country, Donya-e-Eqtesad daily reported. That puts Iran in the better half of the global inequality spectrum.

For members of the Organization for Economic Cooperation and Development, in the late 20th century, considering the effect of taxes and transfer payments, the income Gini coefficient ranged between 0.24 and 0.49, with Slovenia at the lowest end and Chile at the the highest.

African countries had the highest pre-tax Gini coefficients in 2008–9, with South Africa boasting the world’s highest, variously estimated to be 0.63 to 0.7, although this figure drops to 0.52 after social assistance is taken into account, and drops again to 0.47 after taxation.

The global income Gini coefficient in 2005 has been estimated to be between 0.61 and 0.68 by various sources.

Less developed countries tend to lack a large middle class, with limited industrialization hampering the ability of many to earn a regular wage. South Africa is a notably high Gini nation, with a 0.625 coefficient estimated in 2013. European nations such as Denmark, Slovenia, Sweden and Ukraine have the most even income distributions, with coefficients below 0.25.