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Hamidreza Naeb Khosroshahi1 
, Mohammadreza Nahidi Amirkhiz * 2, Mohammadali Motafakker Azad3 , Seyyed Ali Paytakhti Oskooe4
, Mohammadreza Nahidi Amirkhiz * 2, Mohammadali Motafakker Azad3 , Seyyed Ali Paytakhti Oskooe4
1- Social Security Organization
2- Azad University of Tabriz , nahidi@iaut.ac.ir
3- Tabriz University
4- Azad University of Tabriz
2- Azad University of Tabriz , nahidi@iaut.ac.ir
3- Tabriz University
4- Azad University of Tabriz
Abstract: (337 Views)
Aim and Introduction:
Economic Development is one of the important goals of all countries, and most schientists believe that development is only accessible if there is equality. For this reason, despite the differences and contradictions in schools and societies, the issue of inequality and especially economic inequality has been always a vital concern of economists and policymakers all over the world. In the meanwhile, since justice is one of the fundamental goals of Islam, Islamic economists have a more scrutinizing and stricer vision of equality. Accordingly, considering the importance of economic equality in Islam on the one hand, and the cucial role of social security system in equality on the other hand, and also with regard to the fact that Takaful insurance, is a widely used Islamic model in insurance risk coverage which has fundamental differences with conventional insurances, such as being cooperative, not focusing on profit, and compliance with Islam regulations, this study aims to investigate the effect of various layers of the social security system on Islamic-Economic equality in the provinces of Iran during 1387-1400 applying GMM and predicting the effect of Takaful on inequality by directing housholds’ religious expenses towards Takaful insurance.
Methodology:
According to previous theoretical and experimental literature, economic inequality can be affected by inequality in previos years. Therefore, this study uses a dynamic econometric method in order to include the lagged dependant variable as one of the explanatory variables. In general, if a variable depends on vaiables of previous periods, among other independent ones, it is better to use a dynamic panel data model. Generalized method of moments is one of the common and widely used dynamic approaches. The reason for the popularity of this method is that it is very flexible and requires only some weak assumptions. Therefore, GMM greatly solves the problems of static panel data methods relared to autocorrelation, variance heterogeneity, and skewness. This study uses the dunamic panel data approach of GMM. The reason for using this method is that, firstly, there is a possibility that the current dependent variable is affected by the lagged variables, and secondly, since one of the ways to control the endogeneity of variables is to use instrumental variable and due to the fact that it is very difficult to find such an instrument, it is possible to use lagged variables as appropriate instruments applying GMM approach.
Findings:
The results of this research indicate that the inequality of the previous period has a positive and significant relationship with current economic inequality in all three models. This means that high inequality in the previous period causes high inequality in the current period. Moreover, consistent with some studies, GDP has a positive and significant relationship with economic inequality. It means that an increase in GDP is associated with increased inequality. This result indicates that in Iran, there is not an antipoverty growth. Inflation rate has also a negative relationship with inequality in all models, and this relationship is significant in two models. Following some previouse studies, this result can be interpreted as the negative relathionship can be caused by the fact that the inflation of luxury goods is higher the the inflation of essential goods and therefore, increased inflation is more detrimental to the rich. In addition, all three layers of social assistance, basic social insurance, and supplementary social insurance significantly reduce inequality. Meanwhile, basic social insurance has the greatest effect, and social assistance has the least effect on reducing inequality. In addition, based on the results, it can be stated that by directing housholds’ religious expenses towards Takaful insurance, which is an Islamic insurance and a type of basic social insurance, it is possible to reduce Islamic-Economic inequality in 1402 and 1403. The amounts of the decreases are predicted to be a minimum of 0.31 and 0.25 (Chahar Mahal and Bakhtiari) and a maximum of 5.95 and 5.91 (Markazi).
Discussion and Conclusion:
According to the results, investing in all three layers of social security can lead to a reduction in inequality. Therefore, it is suggested not to ignore any layer in policymaking. What is more, due to the greater impact of basic insurance on equality, it is better to consider it as the basic layer of social security and focus on this layer to reduce inequality more. Managers and policymakers can also focus on Takaful as one of the basic types of insurance and help to provide Islamic-Economic equality by directing housholds religious expenses twards Takaful. Besides, it is suggested that the government's plans be based on cobining economic growth with improved welfare and income distribution which is one of the main goals of the Islamic economy. Moreover, it is suggested that the religious and cultural officials should create the necessary explanation and enlightenment related to Takaful and social responsibility of people. The government also is responsible for creating a foundation and guiding people to fulfill their social responsibility by strengthening and developing Zakat headquarters and communicating it with social security organization
Economic Development is one of the important goals of all countries, and most schientists believe that development is only accessible if there is equality. For this reason, despite the differences and contradictions in schools and societies, the issue of inequality and especially economic inequality has been always a vital concern of economists and policymakers all over the world. In the meanwhile, since justice is one of the fundamental goals of Islam, Islamic economists have a more scrutinizing and stricer vision of equality. Accordingly, considering the importance of economic equality in Islam on the one hand, and the cucial role of social security system in equality on the other hand, and also with regard to the fact that Takaful insurance, is a widely used Islamic model in insurance risk coverage which has fundamental differences with conventional insurances, such as being cooperative, not focusing on profit, and compliance with Islam regulations, this study aims to investigate the effect of various layers of the social security system on Islamic-Economic equality in the provinces of Iran during 1387-1400 applying GMM and predicting the effect of Takaful on inequality by directing housholds’ religious expenses towards Takaful insurance.
Methodology:
According to previous theoretical and experimental literature, economic inequality can be affected by inequality in previos years. Therefore, this study uses a dynamic econometric method in order to include the lagged dependant variable as one of the explanatory variables. In general, if a variable depends on vaiables of previous periods, among other independent ones, it is better to use a dynamic panel data model. Generalized method of moments is one of the common and widely used dynamic approaches. The reason for the popularity of this method is that it is very flexible and requires only some weak assumptions. Therefore, GMM greatly solves the problems of static panel data methods relared to autocorrelation, variance heterogeneity, and skewness. This study uses the dunamic panel data approach of GMM. The reason for using this method is that, firstly, there is a possibility that the current dependent variable is affected by the lagged variables, and secondly, since one of the ways to control the endogeneity of variables is to use instrumental variable and due to the fact that it is very difficult to find such an instrument, it is possible to use lagged variables as appropriate instruments applying GMM approach.
Findings:
The results of this research indicate that the inequality of the previous period has a positive and significant relationship with current economic inequality in all three models. This means that high inequality in the previous period causes high inequality in the current period. Moreover, consistent with some studies, GDP has a positive and significant relationship with economic inequality. It means that an increase in GDP is associated with increased inequality. This result indicates that in Iran, there is not an antipoverty growth. Inflation rate has also a negative relationship with inequality in all models, and this relationship is significant in two models. Following some previouse studies, this result can be interpreted as the negative relathionship can be caused by the fact that the inflation of luxury goods is higher the the inflation of essential goods and therefore, increased inflation is more detrimental to the rich. In addition, all three layers of social assistance, basic social insurance, and supplementary social insurance significantly reduce inequality. Meanwhile, basic social insurance has the greatest effect, and social assistance has the least effect on reducing inequality. In addition, based on the results, it can be stated that by directing housholds’ religious expenses towards Takaful insurance, which is an Islamic insurance and a type of basic social insurance, it is possible to reduce Islamic-Economic inequality in 1402 and 1403. The amounts of the decreases are predicted to be a minimum of 0.31 and 0.25 (Chahar Mahal and Bakhtiari) and a maximum of 5.95 and 5.91 (Markazi).
Discussion and Conclusion:
According to the results, investing in all three layers of social security can lead to a reduction in inequality. Therefore, it is suggested not to ignore any layer in policymaking. What is more, due to the greater impact of basic insurance on equality, it is better to consider it as the basic layer of social security and focus on this layer to reduce inequality more. Managers and policymakers can also focus on Takaful as one of the basic types of insurance and help to provide Islamic-Economic equality by directing housholds religious expenses twards Takaful. Besides, it is suggested that the government's plans be based on cobining economic growth with improved welfare and income distribution which is one of the main goals of the Islamic economy. Moreover, it is suggested that the religious and cultural officials should create the necessary explanation and enlightenment related to Takaful and social responsibility of people. The government also is responsible for creating a foundation and guiding people to fulfill their social responsibility by strengthening and developing Zakat headquarters and communicating it with social security organization
Keywords: Economic Inequality, Generalized Method of Moments, Iran Economy, Social Security, Takaful
Article Type: Letter to Editor |
Subject:
Health, Education, and Welfare
Received: 2023/10/17 | Accepted: 2023/11/4
Received: 2023/10/17 | Accepted: 2023/11/4
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