The Interaction between Income Inequality and Inclusive Growth in Iranian Provinces (SURE Approach in Panel Data)

Abstract: The concept of inclusive growth is one of the important issues in the urban economics literature and has been considered in empirical studies recently. For this purpose, the main aim of this paper is to investigate the relationship between income inequality and GDP growth in Iranian provinces over the period of 2000-2012. To conduct this study, the econometric model has been estimated by applying seemingly unrelated regression in panel data for 30 Iranian provinces. The empirical findings of this paper shows that the Gini coefficient as a proxy for income inequality and unemployment rate have negative and the initial level of Gini coefficient has positive and significant effect on the growth of GDP respectively. The overall conclusion of this study suggests that inequality of Iranian provinces can be decreased by improving employment and growth of per capita income.