Perceived Equitability and Labor Participation

Document Type : Research Paper


1 Department of Economics, Allameh Tabataba'i University; Department of Economics, Shahid Beheshti University, Tehran, Iran.

2 Department of Economics, Institute for Management and Planning Studies, Tehran, Iran.


While the “relative Gini coefficient” is one of the common criteria for measuring inequality, people’s perception of inequality seems to go beyond this criterion. Hence, self-reporting of subjective well-being (SWB) is becoming the focus of studies in public policies to improve social welfare. Since such statistics are not currently available in Iran, we are seeking the best possible measure that can reflect the subjective inequality of individuals with existing data. Investigating this issue besides people’s reaction to feeling deprived sheds light on an important attitude of society, and is useful in policy design. This is because as a result of feeling inequitable, some people may stop their economic participation, while others try to be constructive and increase their economic activity. In this regard, we first introduce a criterion for the representation of subjective inequality at the individual level and investigate the results of measuring subjective inequality for nominal and real values, urban and rural areas, as well as by gender groups. We then address the effect of this perceived inequality on the economic participation of individuals. Accordingly, we distinguish the effects of subjective inequality on economic participation by age groups in the range of 15 to 65 years. The results indicate that the subjective inequality among women is greater than men, and is increasing over the years under study. It also appears that the increase in perceived equitability has had its most destructive effect on the middle class, deciles 5-8, while lower deciles react constructively in subjective deprivation.


Main Subjects

Abeler, J., Altmann, S., Kube, S., & Wibral, M. (2010). Gift Exchange and Workers' Fairness Concerns: When Equality is Unfair. Journal of the European Economic Association, 8(6), 1299–1324.
Alesina, A., Di Tella, R., & MacCulloch, R. (2004). Inequality and Happiness: Are Europeans and Americans Different? Journal of Public Economics, 88(9), 2009–2042.
Amiel, Y., & Cowell, F. (1999). Thinking about Inequality: Personal Judgment and Income Distributions. Cambridge: Cambridge University Press.
Amiel, Y., & Cowell, F. A. (1992). Measurement of Income Inequality: Experimental Test by Questionnaire. Journal of Public Economics, 47(1), 3–26.
Amiel, Y., & Cowell, F. A. (1999). Income Transformation and Income Inequality Advances in Econometrics (209–232). In Income Distribution and Scientific Methodology. Berlin: Springer.
Atkinson, A. B., & Brandolini, A. (2010). On Analyzing the World Distribution of Income. The World Bank Economic Review, 24(1), 1–37.
Berry, A., Bourguignon, F., & Morrison, C. (1983). Changes in the World Distribution of Income between 1950 and 1977. The Economic Journal, 93(370), 331–350.
Bosmans, K., Decancq, K., & Decoster, A. (2014). The Relativity of Decreasing Inequality between Countries. Economica, 81(322), 276-292.
Camfield, L., & Esposito, L. (2014). A Cross-Country Analysis of Perceived Economic Status and Life Satisfaction in High- and Low-Income Countries. World Development, 59, 212–223.
Clark, A. E., & d'Ambrosio, C. (2015). Attitudes to Income Inequality: Experimental and Survey Evidence (1147–1208). In Handbook of Income Distribution, 2. Amsterdam: Elsevier.
Clark, A. E., Masclet, D., & Villeval, M. C. (2010). Effort and Comparison Income: Experimental and Survey Evidence. ILR Review, 63(3), 407–426.
Clark, A. E., & Senik, C. (2010). Who Compares to Whom? The Anatomy of Income Comparisons in Europe. The Economic Journal, 120(544), 573–594.
Cornia, G. A., & Kiiski, S. (2001). Trends in Income Distribution in the Post-World War II Period: Evidence and Interpretation. United Nations University (UNU), WIDER Discussion Papers, 2001/89, 1-48.
Cruces, G., Perez-Truglia, R., & Tetaz, M. (2013a). Biased Perceptions of Income Distribution and Preferences for Redistribution: Evidence from a Survey Experiment. Journal of Public Economics, 98, 100-112.
---------- (2013b). Biased Perceptions of Income Distribution and Preferences for Redistribution: Evidence from a Survey Experiment. Journal of Public Economics, 98(Supplement C), 100-112.
de Vries, R., Gosling, S., & Potter, J. (2011). Income Inequality and Personality: Are Less Equal US States Less Agreeable? Social Science & Medicine, 72(12), 1978-1985.
Fehr, E., & Schmidt, K. M. (1999). A Theory of Fairness, Competition, and Cooperation. The Quarterly Journal of Economics, 114(3), 817-868.
Firebaugh, G. (1999). Empirics of World Income Inequality. American Journal of Sociology, 104(6), 1597-1630.
Hagerty, M. R. (2000). Social Comparisons of Income in One's Community: Evidence from National Surveys of Income and Happiness. Journal of Personality and Social Psychology, 78(4), 764-771.
Hey, J. D., & Lambert, P. J. (1980). Relative Deprivation and the Gini Coefficient: Comment. The Quarterly Journal of Economics, 95(3), 567–573.
Kahneman, D., Wakker, P. P., & Sarin, R. (1997). Back to Bentham? Explorations of Experienced Utility. The Quarterly Journal of Economics, 112(2), 375–406.
Macours, K. (2010). Increasing Inequality and Civil Conflict in Nepal. Oxford Economic Papers, 63(1), 1–26.
Milanovic, B. (2002). True World Income Distribution, 1988 and 1993: First Calculation based on Household Surveys Alone. The Economic Journal, 112(476), 51–92.
Morawetz, D., Atia, E., Bin-Nun, G., Felous, L., Gariplerden, Y., Harris, E., Tombros, G., & Zarfaty, Y. (1977). Income Distribution and Self-Rated Happiness: Some Empirical Evidence. The Economic Journal, 87(347), 511–522.
Niño-Zarazúa, M., Roope, L., & Tarp, F. (2016). Global Inequality: Relatively Lower, Absolutely Higher. Review of Income and Wealth63(4), 661–684.
Niv-Yagoda, A. (2020). Association between Trust in the Public Healthcare System and Selecting a Surgeon in Public Hospitals in Israel: A Cross-Sectional Population Study. Israel Journal of Health Policy Research, 9(1), 1–11.
Oto-Peralías, D., & Romero-Ávila, D. (2017). The Consequences of Persistent Inequality on Social Capital: A Municipal-Level Analysis of Blood Donation Data. Economics Letters, 151(Supplement C), 53–57.
Ravallion, M. (2003). The Debate on Globalization, Poverty and Inequality: Why Measurement Matters. International Affairs, 79(4), 739–753.
Ravallion, M. (2017). Inequality and Globalization: A Review Essay. Journal of Economic Literature, 56(2), 620–642.
Ravallion, M., Thorbecke, E., & Pritchett, L. (2004). Competing Concepts of Inequality in the Globalization Debate [with Comments and Discussion]. Globalization, Poverty, and Inequality, 2004, 1-38.
Richardson, J. D. (1995). Income Inequality and Trade: How to Think, What to Conclude. The Journal of Economic Perspectives, 9(3), 33–55.
Roper, E. (1940). Classifying Respondents by Economic Status. Public Opinion Quarterly, 4(2), 270–272.
Runciman, W. G. (1966). Relative Deprivation and Social Justice: Study Attitudes Social Inequality in 20th Century England. Berkshire: Routledge Kegan Paul.
Shibutani, T. (1955). Reference Groups as Perspectives. American journal of Sociology, 60(6), 562–569.
Steptoe, A., Deaton, A., & Stone, A. A. (2015). Subjective Wellbeing, Health, and Ageing. The Lancet, 385(9968), 640–648.
Tideman, S., Frijters, P., & Shields, M. A. (2008). Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles. Journal of Economic Literature, 46(1), 95–144.
Van Praag, B. M. S. (1977). The Perception of Welfare Inequality. European Economic Review, 10(2), 189–207.
Wood, A. (1995). How Trade Hurt Unskilled Workers. The Journal of Economic Perspectives, 9(3), 57–80.
Yitzhaki, S. (1979). Relative Deprivation and the Gini Coefficient. The Quarterly Journal of Economics, 93(2), 321–324.