Structure of Production with Urban–rural Income Inequalities in the Framework of Structural Path Analysis: The Case of Iran

The first experimental SAM for Iran was constructed more than three decades ago under the supervision of Prof. Pyatt. Based on this work Prof. Pyatt had observed that the way in which Iran was spending oil revenues was likely to exacerbate urban–rural income differentials in Iran. In his approach to SAM he did not distinguish between factorial and institutional income distributions preferring to amalgamate both. Prof. Pyatt’s viewpoint and his approach which was largely ignored at that time many still hold true for the Iranian economy today. However, we believe that considering factorial and institutional income distributions separately, would portray a more complete picture of the complexities of structure of production with urban–rural inequalities. In this paper, we attempt to analyze the structure of Production and urban–rural income distributions in terms of factorial income distribution (private and public labour incomes) and institutional income distribution (urban and rural households) in the structural path analysis framework. For this purpose, we have used the 1996 SAM Constructed by the Economic Research Center, Faculty of Economics, Allameh Tabatabai University, in collaboration with Statistical Centre of Iran and Central Bank of Iran.