Analyzing the Asymmetric Effect of Economic Instability on Household Poverty and Income Inequality in Iran

Document Type : Research Article

Authors

1 Ph.D. Student in Public Sector Economics, Department of Theoretical Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

2 Associate Professor, Department of Energy Economics, Faculty of Economic and Administrative Sciences, Mazandaran of University, Babolsar, Iran

3 Professor, Faculty of Economics and Administration Sciences, University of Mazandaran, Babolsar, Iran Professor, Department of Economics, Faculty of Economic and Administrative Sciences, Mazandaran of University, Babolsar, Iran

10.22034/jepr.2025.144051.1281

Abstract

economic stability plays a crucial role in fostering sustainable growth and improving income distribution. Given the importance of these issues in Iran, the present study examines the asymmetric effects of economic instability on household poverty and income inequality over the period 1984–2023. In this study, the poverty gap index and the Foster–Greer–Thorbecke (FGT) index are computed using household income–expenditure data, and the econometric model is estimated through the nonlinear autoregressive distributed lag (NARDL) approach. The results indicate that economic instability exerts a direct and asymmetric long-run effect on poverty, such that a reduction in instability yields a more pronounced favorable impact than the adverse impact of rising instability. Moreover, inflation and economic growth increase poverty, whereas per capita income reduces it, while the size of government has no significant effect. The findings related to income inequality likewise reveal a direct and asymmetric long-run effect, whereby a decline in instability has a stronger beneficial impact than an increase in instability. In addition, inflation, the ratio of subsidies to government expenditures, and unemployment contribute to higher inequality. Given the direct effect of per capita income and the inverse effect of its squared term, the Kuznets hypothesis is not rejected.

Keywords

Main Subjects

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History

  • Receive Date: 10 July 2025
  • Revise Date: 14 December 2025
  • Accept Date: 15 December 2025
  • Publish Date: 21 March 2026

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