Assessment of the Role of Inequality and Income Distribution Factors in the Third Economic Development Plan (with Emphasis on Direct Taxes)

In this paper the Auto Regressive Distributed Lag(ARDL) model has been utilized in order to study the long-terun relations among the elements of direct taxes on the income distribution within the years 1971-2004 and during the third Five-Year Economic Development Plan. Long-terun relations imply that during the hird Five-Year Economic Development Plan only the tax on property has been able to lower the Gini coefficient, while income and corporate taxes have only served to worsen income distribution. Also, improvement of the efficiency of the labor force as well as the income from oil and gas and the extent of openness of the economy in the long run have led to the improvement of income distribution and decrease of inequality. However, increase in the unemployment rate during the above- mentioned period has increased income inequality.