Perceived Equitability and Labor Participation

Abstract

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 improve social welfare. Since such statistics are not currently available in Iran, we are seeking for the best possible measure that can reflect subjective inequality of individuals with existing data. Investigating this issue besides people’s reaction to feeling deprived sheds light on an important attitude of the society, and is useful in policy design. This is because as a result of feeling inequitable, 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 investigate the results of measuring subjective inequality for nominal and real values, urban and rural areas, as well as by the gender groups. We then address 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. The results indicate that the subjective inequality among women is greater than men, and is increasing over the years under study. 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.