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THE RELATIONSHIP BETWEEN INCOME DISTRIBUTION AND DEVELOPMENT: THE CASE OF TURKEY

Year 2017, Volume: 4 Issue: 2, 9 - 16, 30.04.2017

Abstract

This study aims to determine whether income inequality in Turkey is an obstacle in economic
development or not. For this purpose, the gini coefficient are used as a measure income inequality and
real GDP is used as an economic growth indicator between the years of 1990-2015. Johansen cointegration
method is utilized in the analysis of the study. Co-integration analysis has shown a longterm
relationship between the gini coefficient and economic growth. In order to determine the
direction of causality, the error correction model is applied. The findings indicate that the direction of
causality runs from economic growth to gini coefficient. This result shows that economic growth is an
important factor in the reduction of income inequality. Empirical result reveals also that the reduction
of income inequality through economic growth is the crucial factor for Turkey’s economic
development.

References

  • AHITUV, A. and MOAV, O., 2003, Fertility clubs and economic growth. In Eicher, T. S. & Turnovsky, S. J. (Eds.), Inequality and Growth: Theory and Policy Implications, 61-87. Cambridge, London: MIT Press.
  • ALESINA, A. and PEROTTI, R., 1996, Income Distribution, Political Instability, and Investment, European Economic Review, 40(6), 1203-1228.
  • ALESINA, A. and Rodrik, D., 1994, Distributive Politics and Economic Growth, Quarterly Journal of Economics, 109(2), 465-490.
  • BARRO, R.J. and SALAI-MARTIN X., 1997, Technological Diffusion, Convergence, and Growth, Journal of Economic Growth, 2(1), 1-26.
  • CASTELLO, A. and DOMENECH, R., 2002, Human Capital Inequality and Economic Growth: Some New Evidence, Economic Journal, 112(478), 187-200.
  • CLARKE, G. R. G., 1995, More Evidence on Income Distribution and Growth, Journal of Development Economics, 47(2), 403-427.
  • COLL, J. A. C., 2014, Inequality and Growth in the Context of the Mexian Economy: Does Inequality Matter for Growth, ECINEQ Working Paper Series, No. 2014-331.
  • DAVIS, L. S., 2007, Explaining the Evidence on Inequality and Growth: Informality and Redistribution, The B.E. Journal of Macroeconomics, 7(1), 1-35.
  • DUMLU, U., and Aydın, Ö., 2008, Ekonometrik Modellerle Türkiye İçin 2006 Yılı Gini Katsayısı Tahmini, Ege Akademik Bakış, 8(1), 373-393.
  • FORBES, K. J., 2000, A Reassessment of the Relationship Between Inequality and Growth, American Economic Review, 90(4), 869-887.
  • JOHANSEN, S., 1988, Statistical Analysis of Cointegration Vectors, Journal of Dynamics and Control, 12, 231-254.
  • JOSTEN, S. D., 2004, Social Capital, Inequality, and Economic Growth, Journal of Institutional and Theoretical Economics-Zeitschrift Fur Die Gesamte Staatswissenschaft, 160(4), 663-680.
  • KUZNETS, S., 1955, Economic Growth and Income Inequality, The American Economic Review, 45, 1-28.
  • LEE, W. and ROEMER, J. E., 1998, Income Distribution, Redistributive Politics, and Economic Growth, Journal of Economic Growth, 3(3), 217-40.
  • LEE, W. and ROEMER, J. E., 1998, Income Distribution, Redistributive Politics, and Economic Growth, Journal of Economic Growth, 3(3), 217-40.
  • LI, H. and ZOU, H., 1998, Income Inequality is not Harmful for Growth: Theory and Evidence, Review of Development Economics, 2(3), 318-334.
  • PANIZZA, U. (2002). Income inequality and economic growth: Evidence from American data, Journal of Economic Growth, 7(1), 25-41.
  • PARTRIDGE, M., 1997, Is Inequality Harmful for Growth? Comment?. The American Economic Review, 87, 1019-1032.
  • PEROTTI, R. (1993). Political equilibrium, income distribution and economic growth, Review of Economic Studies, 60(4), 755-776.
  • PERSSON, T. and TABELLINI, G., 1994, Is Inequality Harmful for Growth, American Economic Review, 84(3), 600-621.
  • PIKETTY, T., 2014, Yirmi Birinci Yüzyılda Kapital (Çeviren: Hande Koçak). Türkiye İş Bankası Kültür Yayınları, İstanbul.
  • ROBINSON, S., 1976, A Note on the U Hypothesis Relating Inequality and Economic Development, American Economic Review, 66, 437-440.
  • TUIK., 2016, Gelir ve Yaşam Koşulları Araştırması 2015, file:///C:/Users/User/Downloads/Gelir_ve_Ya%C5%9Fam_Ko%C5%9Fullar%C4%B1_Ara%C5%9Ft_21.09.2016.pdf (Access Date: 10 Ocak 2017).

THE RELATIONSHIP BETWEEN INCOME DISTRIBUTION AND DEVELOPMENT: THE CASE OF TURKEY

Year 2017, Volume: 4 Issue: 2, 9 - 16, 30.04.2017

Abstract

This study aims to determine whether income inequality in Turkey is an obstacle in economic
development or not. For this purpose, the gini coefficient are used as a measure income inequality and
real GDP is used as an economic growth indicator between the years of 1990-2015. Johansen cointegration
method is utilized in the analysis of the study. Co-integration analysis has shown a longterm
relationship between the gini coefficient and economic growth. In order to determine the
direction of causality, the error correction model is applied. The findings indicate that the direction of
causality runs from economic growth to gini coefficient. This result shows that economic growth is an
important factor in the reduction of income inequality. Empirical result reveals also that the reduction
of income inequality through economic growth is the crucial factor for Turkey’s economic
development.

References

  • AHITUV, A. and MOAV, O., 2003, Fertility clubs and economic growth. In Eicher, T. S. & Turnovsky, S. J. (Eds.), Inequality and Growth: Theory and Policy Implications, 61-87. Cambridge, London: MIT Press.
  • ALESINA, A. and PEROTTI, R., 1996, Income Distribution, Political Instability, and Investment, European Economic Review, 40(6), 1203-1228.
  • ALESINA, A. and Rodrik, D., 1994, Distributive Politics and Economic Growth, Quarterly Journal of Economics, 109(2), 465-490.
  • BARRO, R.J. and SALAI-MARTIN X., 1997, Technological Diffusion, Convergence, and Growth, Journal of Economic Growth, 2(1), 1-26.
  • CASTELLO, A. and DOMENECH, R., 2002, Human Capital Inequality and Economic Growth: Some New Evidence, Economic Journal, 112(478), 187-200.
  • CLARKE, G. R. G., 1995, More Evidence on Income Distribution and Growth, Journal of Development Economics, 47(2), 403-427.
  • COLL, J. A. C., 2014, Inequality and Growth in the Context of the Mexian Economy: Does Inequality Matter for Growth, ECINEQ Working Paper Series, No. 2014-331.
  • DAVIS, L. S., 2007, Explaining the Evidence on Inequality and Growth: Informality and Redistribution, The B.E. Journal of Macroeconomics, 7(1), 1-35.
  • DUMLU, U., and Aydın, Ö., 2008, Ekonometrik Modellerle Türkiye İçin 2006 Yılı Gini Katsayısı Tahmini, Ege Akademik Bakış, 8(1), 373-393.
  • FORBES, K. J., 2000, A Reassessment of the Relationship Between Inequality and Growth, American Economic Review, 90(4), 869-887.
  • JOHANSEN, S., 1988, Statistical Analysis of Cointegration Vectors, Journal of Dynamics and Control, 12, 231-254.
  • JOSTEN, S. D., 2004, Social Capital, Inequality, and Economic Growth, Journal of Institutional and Theoretical Economics-Zeitschrift Fur Die Gesamte Staatswissenschaft, 160(4), 663-680.
  • KUZNETS, S., 1955, Economic Growth and Income Inequality, The American Economic Review, 45, 1-28.
  • LEE, W. and ROEMER, J. E., 1998, Income Distribution, Redistributive Politics, and Economic Growth, Journal of Economic Growth, 3(3), 217-40.
  • LEE, W. and ROEMER, J. E., 1998, Income Distribution, Redistributive Politics, and Economic Growth, Journal of Economic Growth, 3(3), 217-40.
  • LI, H. and ZOU, H., 1998, Income Inequality is not Harmful for Growth: Theory and Evidence, Review of Development Economics, 2(3), 318-334.
  • PANIZZA, U. (2002). Income inequality and economic growth: Evidence from American data, Journal of Economic Growth, 7(1), 25-41.
  • PARTRIDGE, M., 1997, Is Inequality Harmful for Growth? Comment?. The American Economic Review, 87, 1019-1032.
  • PEROTTI, R. (1993). Political equilibrium, income distribution and economic growth, Review of Economic Studies, 60(4), 755-776.
  • PERSSON, T. and TABELLINI, G., 1994, Is Inequality Harmful for Growth, American Economic Review, 84(3), 600-621.
  • PIKETTY, T., 2014, Yirmi Birinci Yüzyılda Kapital (Çeviren: Hande Koçak). Türkiye İş Bankası Kültür Yayınları, İstanbul.
  • ROBINSON, S., 1976, A Note on the U Hypothesis Relating Inequality and Economic Development, American Economic Review, 66, 437-440.
  • TUIK., 2016, Gelir ve Yaşam Koşulları Araştırması 2015, file:///C:/Users/User/Downloads/Gelir_ve_Ya%C5%9Fam_Ko%C5%9Fullar%C4%B1_Ara%C5%9Ft_21.09.2016.pdf (Access Date: 10 Ocak 2017).
There are 23 citations in total.

Details

Journal Section Articles
Authors

Sami Taban

Mehmet Şengür

Publication Date April 30, 2017
Published in Issue Year 2017 Volume: 4 Issue: 2

Cite

APA Taban, S., & Şengür, M. (2017). THE RELATIONSHIP BETWEEN INCOME DISTRIBUTION AND DEVELOPMENT: THE CASE OF TURKEY. Journal of Life Economics, 4(2), 9-16.