Conference Paper
When Sanctions Hit Home: Measuring Poverty Dynamics in Iran Using a Synthetic Panel Approach
No.
ERF32AC_153
Publisher
ERF
Date
May, 2026
Topic
I3. Welfare, Well-Being, and Poverty
Economic sanctions have become a routine instrument of foreign policy, yet their distributional consequences for households in target countries remain poorly understood. This paper examines how successive waves of international sanctions reshaped poverty dynamics and income mobility in Iran over 2010–2019. Using six rounds of nationally representative Household Income and Expenditure Surveys, we construct synthetic panels from repeated cross-sections and estimate nonparametric and parametric bounds on poverty transitions, validating the approach against the 2014–2016 household panel and a set of robustness checks. We distinguish three episodes—sanctions escalation (2010–2013), the JCPOA-related relief (2014–2016), and the “maximum pressure’’ campaign (2017–2019). Chronic poverty rises from roughly 7.5–11% in the first episode to 8–15.5% under relief and then surges to 18–22% under maximum pressure. Poverty entry responds sharply to sanction intensity, increasing by about 8 percentage points between 2014–2016 and 2017–2019, while exits remain persistently low even when sanctions are eased. These asymmetric transitions signal deepening long-term deprivation and growing vulnerability among near-poor households. The effects are far from uniform. Female-headed, rural, low-education, and informally employed households face the highest risks of remaining or becoming poor, and chronic poverty becomes increasingly concentrated in peripheral provinces, whereas central regions are more insulated. Overall, sanctions not only raise aggregate poverty but also amplify regional and socio-economic divides, and short periods of partial relief, without strong domestic reforms, appear insufficient to reverse these dynamics.
Authors
Shakiba Kheirkhahan
University of Tehran
Authors
Atiyeh Vahidmanesh
Assistant Professor of Economics, University of Tehran