The impact of international sanctions on income mobility: Evidence from Iran

Abstract This article studies the impact of international economic sanctions on income mobility at the Macro level. A series of economic sanctions were imposed on Iran during 2008–2015 and lifted to some extent in 2015. Using some pseudo‐panel datasets, constructed based on 18 household surveys during 2001–2018, we investigate the impact of sanctions on four income mobility measures: directional income movement, positional movement, time dependence, and mobility as an equalizer of longer‐term incomes. The results show that in the sense of directional income mobility, the sanctions are followed by welfare losses for all income groups, with richer groups experiencing larger losses than poorer ones. The rich face income declines that are larger compared to those experienced by the poor, and this causes: first, richer (poorer) groups to face a higher probability of moving downward (upward) in relative terms, thus we see an increase in positional income mobility (and also time dependence) with the sanctions; and second, an increase in mobility in the sense of equalizer of longer‐term incomes. We get the opposite results with the removal of sanctions.