The allocation of opportunities affects income distribution and income inequality. This paper analyzes the economic impacts of initial allocation of resources and redistribution of opportunities. In this study, we apply a computable general equilibrium (CGE) model focusing on distribution of opportunities and allocation of available resources. The differences between households' income are caused by differences in labor income (skilled and unskilled) and the household's income from capital stock. The model is calibrated based on micro consistent matrix (MCM) of Iranian economy. We found that, the redistribution of opportunities and re-allocation of resources can reduce inequality. In other words, improvement in equality of opportunities leads to more equal society. The important finding of the study is that an increase in inequality of opportunity may cause the income gap grows faster. So, big reduction in inequality of income after small reduction in inequality of opportunities can be witnessed.

One of the issues discussed in economy is the socioeconomic inequality in the society. Income mobility is another measure which indicates the degree of inequality of opportunity in a society. The extent of income mobility depends on socio-economic status of the individuals. Different socio-economic status leads to further inequality and increases inequality of opportunity. Such inequalities lead to the formation of Poverty which can be reproduced and transmitted from one cohort to the other, if not utilize the appropriate method. income mobility is measured as either conditional or absolute one. In Conditional mobility fixed effects are considered, however in absolute mobility it is not so. Fixed effect parameter that indicates the heterogeneity between individuals. According to the importance of the issue of poverty and the relation it has with inequality, this paper studies the conditional mobility in the economy of  Iran. In this study Household Survey Data collected by Iran Statistical Center from 1988 till 2011 is used. The method of nonlinear dynamic pseudo-panel has been used in order to measure income inequality dynamics. Nonlinear dynamics of income inequality for urban areas in Iran are estimated. This method enables us to track the performance of each cohort over time. The main results of this study indicate that the conditional income mobility is low and dine quality in the country has increased over time. Facing negative shocks, households cannot quickly improve their situation and return to the initial income, and at the same time, the market operation in itself cannot fix the problem. This means that the market provides more favorable conditions for people who have higher power and wealth. This leads the inequality to spread to the higher level.