Abstract
Our goal is to examine the income inequality and welfare effects of the direct distribution of resource rents and subsequent taxation in Iran. We use survey-based microdata that covers 140,000 individuals, which include more than 36,000 Iranian urban and rural households in 2009. We examine how direct distribution of oil and gas rents among all citizens and a subsequent direct income tax differ from distributional impacts of targeted policies on income inequality and poverty in Iran. Our analysis shows that the resource dividend policy with a subsequent direct income tax has a significant decreasing effect on the household Gini index while targeted policies are more effective in reducing number of households under the poverty line.
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