Allameh Tabataba’i University Strategic Recommendations for  Administrative Bodies

Allameh Tabataba’i University Strategic Recommendations for Administrative Bodies

Fair Distribution of the Shares of Production Factors 1 and 2 (Subject of Clause 5 of the General Policies of the Resistance Economy)

Author
Department of Department of , Allameh Tabataba'i University, Allameh Tabataba'i University
Abstract
The distribution of the shares of production factors is a fundamental issue in political economy and a primary epicenter for the formation of a sense of injustice within society, the disorganization of which can undermine political legitimacy, social cohesion, and economic efficiency. An examination of distributional indicators in Iran's economy reveals that the share of "employee compensation" in value added is uncharacteristically low, estimated at less than 25 percent based on input-output table data, whereas its average in European economies is approximately 53 percent and in developing countries, 38 percent. Concurrently, the share of operating surplus, income derived from capital and self-employment is extremely high, and the upward trend of bank deposit profits relative to gross domestic product, alongside the considerable share of real estate income and intermediary rents, points toward the intensification of inequality. This situation, compounded by weak labor productivity, a lack of effective tax bases on capital gains and high incomes, and the absence of codified policies regarding distributional rules, has caused rent-seeking market mechanisms to effectively dictate the shares of factors. Reform strategies include formulating comprehensive policies for factor distribution, levying taxes on capital gains and total income, reforming rent-seeking incentives in imports, strengthening active labor market policies, enhancing labor skill proficiency, diversifying contracts and profit-sharing models, and clarifying payment rules in the public sector by establishing a publicly accessible database.
Keywords