Perceived Equitability and Labor Participation

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-report of subjective well-being (SWB) is becoming the focus of studies in public policies to improving social welfare. Since such statistics are not currently available in Iran, we are seeking the best possible measure in this study that could reflect subjective inequality of individuals with existing data. Investigating this issue is necessary because people's reaction to perception of inequitablity of their incomes is important. In effect, 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 examine the results of measuring subjective inequality for nominal and real values, urban and rural areas, as well as by the gender groups. We then examined 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, by controlling for factors such as gender and literacy and in different income deciles. Of course, due to the criterion we use, there are endogeneity problems that we have largely eliminated.

The results indicate that the subjective inequality of women is greater than men, and is increasing over the studied years. 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.