Some of them are state specific and some of them are time variant. The influence mechanisms of these factors are considered theoretically and some of them are empirically tested as significant factors. Firstly, we frame the model for explaining income inequality in functional form separately in each category and finally incorporate all hypothetical and empirically tested factors in a general model, and also explain their character (signs).
3. FACTORS OF INCOME INEQUALITY AND THEIR INFLUENCE MECHANISM:
In this section, all factors of income inequality are introduced which is proposed in previous literature as known to the author of this article. The theoretical hypotheses and the results of earlier studies about the character (sign) of these factors are discussed. It is worth mentioning that often it is not clear whether the authors of previous studies is discussed the direct or total effect of a particular factor. The factors of income inequality are taken to fall into the following categories: socio-economic factors, demographic factors, political factors, and macro-economic factors.
3.1 Socio-Economic