Basic Income by Default: Lessons from Iran’s ‘Cash Subsidy’ Programme

Abstract

This paper considers Iran's nationwide universal cash transfer programme which was launched in December 2010 as compensation for massive cuts in subsidised prices of energy and other basic products. We focus on the unusual manner in which the programme emerged and its potential lessons. Of particular interest is the impact on incomes and expenditures, labour supply, inflation, income distribution and poverty in the immediate aftermath of the launch of the programme, as well as its implications for similar schemes such as financing a UBI by carbon taxes. Given an extremely adverse broader environment however, the programme, while still continuing after eight years, has lost much of its lustre as the purchasing power of the transfers has been largely wiped out through inflation.

Social Development and Revolution in Iran

“…While Iran reached its lowest level of income inequality according to existing indicators, this reduction in the level of inequality did not endure, as is evident from Figure. 9 (Karshenas and Tabatabai 2019). Overall, the record of income inequality was better in the post-revolutionary regime in the sense that it has not reached the high levels of the 1970s.…”