Poverty Decomposition Based on Iranian Households’ Socioeconomic Characteristics: Integrated Micro and Macro Approach

Comparison of the private consumption extracted from the Household Budget Survey and the National Accounts in Iran reveals that not only the latter always exceeds the former, but also the gap between them has increased over time. In this paper we propose a method to eliminate the discrepancy between these two sources. We integrate the micro and macro data and compare the poverty indicators in Iran for 1991-2007. Then we decompose the poverty changes over time according to socioeconomic characteristics of Iranian households into the exact sum of three independent components, i.e. growth, inequality and population effect. Results show that the total poverty changes in Iran in the previous years have been most affected by the growth effect and least affected by the population effect. The growth and overall effects have always had the same direction in the previous years in Iran.JEL Classification: I32