Investigating the Factors Affecting Income Inequality in Iran with Emphasis on Financial Depth and Education

The main purpose of this article is to investigate the factors affecting Iranchr('39')s income inequality in the period 1352 to 1396. For this purpose, causal relationships were first investigated using Hsiao and Toda-Yamamato causality tests. Then the effects of effective factors were estimated using error correction patterns.The results of causal tests in general showed that there is a causal relationship between income inequality with consumption variables, GDP per capita, trade and primary education. The results of error correction models also showed that increasing literacy, reducing money supply, reducing economic growth, increasing consumption and reducing financial development increase income inequality in the long run. But they do not have a significant effect on income inequality in the short run.The results of the study contain the policy message that policymakers should focus on elementary education (as opposed to higher education) to reduce income inequality.