Iranian Energy Economics

Investigating the reform of fuel subsidy on income distribution in Iran

Articles in Press

Document Type : Research Paper

Authors

Soudabeh Rafiei 1
seyedmohamadreza seyednourani 2
Teimor Mohammadi 3

1 student

2 department of theoretical economics faculty of economics

3 Faculty of Economics, Allameh Tabatabai University

https://doi.org/10.22054/jiee.2025.76720.2048
Abstract
The purpose of this article is to evaluate the progress of fuel subsidies as well as the budgetary and distributional effects of the possible removal of such subsidies in Iran. In this research, the analysis of the machine learning scenario model, the microsimulation model of the tax benefit for Iran, along with the consumption and subsidy microdata of households since the subsidy reform has been used. The results of the research show that the subsidy for consumption is advanced towards an increase, while the subsidy for gasoline and diesel tends to decrease. The paper's simulations show that removing all fuel subsidies would increase poverty and inequality due to the importance of the domestic gas subsidy to low-income households. Eliminating gasoline and diesel subsidies will not affect poverty and inequality, while helping to reduce government spending. It was also shown that using part of the budget saved from fuel subsidy removal to increase social assistance payments in Iran can be a mechanism to compensate low-income families after fuel subsidy removal.

Keywords

: consumption reform
simulation
household consumption
livelihood assistance
Iran'؛ s economy
Subjects
Iranian Energy Economics

Articles in Press, Accepted Manuscript
Available Online from 04 February 2025

  • Receive Date 26 November 2023
  • Revise Date 02 February 2025
  • Accept Date 04 February 2025
  • First Publish Date 04 February 2025
  • Publish Date 04 February 2025

Home

Editorial Board

Guide for Authors

Submit Manuscript

Reviewers

Contact Us