Analyzing the effects of technology change and tax system on wage inequality (case study of Iranian provinces)
Subject Areas : Technology ManagementSaleh Shahrivar 1 , abbas aminifard 2 , mehrzad ebrahimi 3 * , Hashem Zare 4
1 - Ph.d. student in economics, shiraz branch, Islamic azad university, shiraz, iran
2 - Assistant professor, faculty of economics, shiraz branch, Islamic azad university, shiraz, iran
3 - Assistant professor, faculty of economics, shiraz branch, Islamic azad university, shiraz, iran
4 - Assistant professor, faculty of economics, shiraz branch, Islamic azad university, shiraz, iran
Keywords: Technology, tax system, wage inequality, Iranian provinces, EGLS model.,
Abstract :
The advancement of technology and the increase in individuals' skill levels have led to higher wages and, consequently, a rise in wage inequality. In this context, tax revenues are considered the most important governmental tool for addressing this disparity. This research seeks to answer the question: Has the tax system in Iran been effective in reducing the wage gap, and if so, to what extent can it mitigate this inequality? This study examines the impact of technological change and the tax system on wage inequality using the panel econometric technique of Weighted Least Squares (EGLS) over the period 2010–2019 (1389–1398) across 11 provinces that collectively account for approximately 95% of the country’s tax revenues. The estimation results show that a one percent increase in technology leads to a nearly 16% rise in wage inequality. In the second model, which incorporates tax variables, this increase is reduced to approximately 10%. It can thus be concluded that Iran’s tax system has a mitigating effect on wage inequality, reducing the disparity by around 6%. However, it has not been sufficient to eliminate the wage gap entirely.
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