More than half of the poor people in Iran and the world live in rural areas and are mainly engaged in agricultural activities. The agriculture is affected by climate change and rainfall level and it’s fluctuations as well as economic and social factors. Accordingly, this study analyses the factors affecting rural income inequality with an emphasis on rainfall levels and it’s fluctuations during the period 1992-2013 by using ARDL approach. The results showed that the Kuznets hypothesis about Iran's rural Gini coefficient is true both in the short and long run. Based on the results, dependency ratio and facilities granted to workers in the agricultural sector (and the rural literacy rate) have positive (negative) impacts on rural Gini coefficient and the long run effects are greater than the short run one. As well as, rainfall fluctuations both in the short and in the long run will increase rural income inequality.

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