Oil Revenues and Inequality in the Oil-Rich Countries: The Case of Iran

The Rentier State Theory, the Dutch disease Paradigm, and the natural resource curse are some of the dominant perspectives developed to explain the sociopolitical and economic conditions of oil-rich countries. but the important issues, neglected by these theoretical frameworks, are the high effects of intense budget dependence on oil revenues, revenue fluctuations, and the institutional framework in which policies are made. these factors determine the outcome of oil revenues to society and under this circumstance, efficient policies to deal with socioeconomic problems such as inequality are not taken.

The current paper endeavors to show the mechanism of interaction between oil revenue dependency, income fluctuation, as well as the lack of efficient institutions to address the problem of inequality in the oil-rich country of Iran. We ask: what consequences have reliance on oil revenues had for inequality in post-revolutionary Iran? By examining Iran's post-revolutionary sociopolitical and economic transformations, particularly in the recent decades, we argue that the strong dependence on oil revenues, the fluctuations of these revenues, and the lack of efficient institutions have caused inequalities to persist such that changes in inequality do seem to be linked to changes in oil revenues.