The Effect of Government Social Spending on Income Inequality in OECD: A Panel Data Analysis

Yıl 2018, Cilt: 1 Sayı: 3, 184 - 202, 15.10.2018

Mustafa İlker Ulu

Öz

Income inequality is one of the issue which is most discussed and
struggled for its solution throughout the history of economics. Since the
1990s, income inequality has increased in most of the OECD (The Organisation
for Economic Co-operation and Development) countries as in the whole world. Government
social spending is one of the most important means of directly regulating income
inequality. This study investigated the effect of goverment social spending on
income inequaltiy for 21 OECD countries by analyzing Panel Data. According to
the findings obtained, government social spending affect income inequality positively.
Income inequality decreases when the government social spending increase. It
has been proved that government social spending was more effective than
education expenditures in regulating income inequality. It is also understood
that unemployment and population growth affected the income inequality
negatively. Besides, there is a negative relationship between openness,
education expenditures, elderly population, education participation and income inequality.

Anahtar Kelimeler

Income Inequality, Government Social Spending

The Effect of Government Social Spending on Income Inequality in OECD: A Panel Data Analysis

Öz

Income inequality is one of the issue which is most discussed and struggled for its solution throughout the history of economics. Since the 1990s, income inequality has increased in most of the OECD (The Organisation for Economic Co-operation and Development) countries as in the whole world. Government social spending is one of the most important means of directly regulating income inequality. This study investigated the effect of goverment social spending on income inequaltiy for 21 OECD countries by analyzing Panel Data. According to the findings obtained, government social spending affect income inequality positively. Income inequality decreases when the government social spending increase. It has been proved that government social spending was more effective than education expenditures in regulating income inequality. It is also understood that unemployment and population growth affected the income inequality negatively. Besides, there is a negative relationship between openness, education expenditures, elderly population, education participation and income inequality.

Anahtar Kelimeler

Income Inequality, Government Social Spending

Kaynakça

• Adema, W., P. Fron and M. Ladaique, “Is the European Welfare State Really More Expensive? Indicators on Social Spending, 1980-2012 and a Manual to the OECD Social Expenditure Database (SOCX)”, OECD Social, Employment and Migration Working Papers, No. 124, OECD Publishing, Paris, 2011. (http://dx.doi.org/10.1787/5kg2d2d4pbf0-en)Afonso, Antonio. Schukrecht, Luger and Tanzi, Vito. “Income Distribution Determinants and Public Spending Efficency”, European Central Bank Working Paper. Series. No:861, January 2008, ss. 7-30.Altan, Ömer Z. Sosyal Politika Dersleri. 4. Edition. Eskişehir: Anadolu University Publications, 2006.Atkinson, Anthony Barnes ve François Bourguignon (Ed.). Handbook of Income Distribution. 1. Edition, Elsevier, Vol.1, No.1, 2000.Atkinson, B. Anthony. "Income Inequality in OECD Countries: Data and Explanations". CESifo Working Papers. Vol. 881, No. 10, 2003, pp. 25-30.Baltagi, Badi H. Panel Data: Theory and Applications. Heidelberg: Physica-Verlag, 2005.Barr, N. The Economics of the Welfare State, Oxford University Press. 2004.Bargain, Olivier and Doorley, Karina. “Caught in trap? The Disincentive Effect of Social Assistance”. IRISS Working Paper Series. 2009, ss.1-32.Bhatta, Saurav Dev. "Has the Increase in World-Wide Openness to Trade Worsened Global Income Inequality". Papers in Regional Science. April 2002, Vol. 81, No. 2, pp. 177-196.Caminada, Koen. Goudsward, Koes and Koster, Ferry. “Social Income Transfers and Poverty Alleviation in OECD Countries”. Department of Economics Research Memorandum 2010.01. 2010, pp. 1-23.Caminada, Koen ve K. Goudswaard . "Effectiveness of Poverty Reduction in The EU: A Descriptive Analysis". Poverty & Public Policy, Policy Studies Organization, 1 (2), 2009. pp. 5-64. Caminada, Koen ve K. Goudswaard. "The Relationship Between Alternative Measures of Social Spending and Poverty Rates". International Journal of Business and Social Sciences, 1 (5), 2012, pp. 8-25.Caminada, Koen. K. Goudswaard, ve F. Koster. "Social Income Transfers and Poverty: A CrossCountry Analysis for OECD Countries". International Journal of Social Welfare, 20 (1), 2011, pp. 1-12.Calderon, Cesar ve Chong, Alberto. “External Sector and Income Inequality in Interdependent Economies Using a Dynamic Panel Data Approach”. Economics Letters. Vol. 71, 2001, pp. 225-231.Castrol, Gerardo Angeles. “The Effect of Trade and Foreign Direct Investment on Inequality: Do Governance and Macroeconomic Stability Matter?”. Economía Mexicana Nueva Epoca. Vol. XX, No. 1, 2011, pp. 181-219.Chakrabarti, Avik. “Does Trade Cause Inequality?”. Journal of Economıc Development. Vol. 25, No. 2, December 2000, pp. 5-15.Chu, Ke-young. Davoodi, Hamid and Gupta, Sanjeev. “Income Distribution and Tax and Government Social Spending Policies in Developing Countries”. World Institute for Develeopment Economics Research (WIDER). Working Papers No: 214, December 2000, pp. 2-30. Danziger, S., Haveman, R. and Plotnick, R.. “How Income Transfer Programs A§ect Work, Savings, and the Income Distribution: A Critical Review”, Journal of Economic Literature. Vol.19, No:3, 1981, pp. 975-1028.Ditch, John. “The structure and Dynamics of Social Assistance in the European Union” Wendy O’Conghaile (Ed.), Linking welfare to work in, Luxembourg: Official Publications of the European Communities 1999, pp. 59-71.Dollar, David and Kraay, Aart. “Growth Is Good for Poor”. The World Bank Development Research Group. No. 20433, Washington DC, 2004, pp. 26-32.Falbermayer, Gabriel J. “Dynamic Panel Data Evidence on the Trade-Income Relation”. Review of World Economics. December 2005, Vol. 141, Issue 4, pp. 583-611.Gregorio, Jose De ve Lee, Jong-Wha. “Education and Income Inequality: New Evidence From Cross Country Data”. Review of Income and Wealth. Series 48, Number 3, September 2002, pp. 10-15.Gujarati, Damodar N. Temel Ekonometri. İstanbul: Literatür Yayınları, 1999.Guio, Anne- Catherine. "Income, Poverty and Social Exclusion in the EU25", Statistics in Focus: Population and Social Conditions, 13/2005, pp. 1-7. Hacımahmutoğlu, Hande. “Türkiye’deki Sosyal Yardım Sisteminin Değerlendirilmesi”, Thesis of DPT, DPT, 2009.Keller, Katarina R.I. “How Can Education Policy Improve Income Distribution? An Empirical Analysis of Education Stages and Measures on Income Inequality”. The Journal of Developing Areas. Vol. 43, No. 2, 2010, pp. 51-77.Levine, Ross ve Renelt, David. “A Sensitivity Analysis of Cross Country Growth Regression”. The American Economic Review. Vol. 82, No. 4, September 1992, pp. 942-963. Reuveny, Rafael and Li, Quan. “Economic Openness, Democracy, and Income Inequality an Empirical Analysis”. Comparative Political Studies. Vol. 36, No. 5, June 2003, pp. 575-601.Li, Hongyi. Xie, Danyang and Zou, Heng-fu. “Dynamics of Income Distribution”. Canadian Journal of Economics. Vol. 33, No. 4, 2000, pp. 937-961. Lindert, Kathy. Survey of Social Assistance in OECD Countries. World Bank, 2002.Mahler, Vincent A. “Economic Globalization, Domestic Politics and Income Inequality in the Developed Countries a Cross-National Study”. Comparative Political Studies. Vol. 37 No. 9, November 2004, pp.1025-1053.McMaken, Ryan: "Social Expenditures" In the US Are Higher Than All Other OECD Countries, Except France”, Mises Institute Publications, October 2015.Martinez - Vazquez, Jorge. Moreno - Dodson, Blanca and Vulovic. Violeta, "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence From a Large Panel of Countries", International Center For Public Policy Working Paper 12-25, April 2012. Milanovic, Branco. “Can We Discern The Effect of Globalization on Income Distribution, Evidence From Household Budget Surveys”. World Bank Policy Research Working Paper. Vol. 2876, April 2002, pp. 1-22. Neubourg, Chris de. “Social Assistance Program in the EU: its role within social protection, differences and similarities and coverage”, Maastricht Graduate School of Governance. 2004, pp. 1-47.OECD, OECD Employment Outlook, 2016. (www.oecd.org/employment/outlook.) OECD, Social Expenditure Update (October 2016), 2016.. (http://www.oecd.org/social/expenditure.htm.) OECD, The Social Expenditure Database: An Interpretive Guide SOCX 1980-2003. 2007.Önen, Mustafa S. “Yerel Yönetimlerin Yoksullukla Mücadelesi: Malatya Belediyesi Örneği”, Journal of Sayıstay. Vol.79, Ankara: 2010, pp. 63-95. Schwabish, Jonathan. Smeeding, Timothy and Osberg, Lars. “Income Distribution and Social Expenditures: A Crossnational Perspective”. Luxemburg Income Study (LIS) Working Papers Series. No: 350, October 2004, pp. 5-23. Schultz, Theodore W. “The Economic Value of Education”. The American Economic Review. Vol. 55, No. 3, June 1965, pp. 637-640.Sylwester, Kevin. “Can Education Expenditures Reduce Income Inequality?”. Economics of Education Review. Vol. 21, 2002, pp. 43-52.Szekely, Miguel ve Sámano, Claudia. “Did Trade Openness Affect Income Distribution in Latin America? Evidence for the Years 1980-2010”. UNU World Institute for Development Economics Research (UNU-WIDER). Working Paper No. 2012/03, 2012, pp. 1-24. Tascı, Faruk. “Türkiye’nin Kamusal Sosyal Yardım Anlayışı (1980-2007) Üzerine Bir Analiz”, Journal of Istanbul University. Sayı:55, 2008, ss.127-149.Tokol, Aysen. Sosyal Politika. 2. Edition. Bursa: Publcations of Vipas A.S., 2000.Vaughan, Sharon K. "Social Services, Population Control and Individual Responsibility: Aristotle and the Problem of Poverty”, Paper presented at the annual meeting of the Midwest Political Science Association. Apr 12, 2007.Wooldridge, Jeffrey M. Econometric Analysis of Cross Section and Panel Data. Cambridge: The MIT Press, 2002.World Bank, Social Assistance in Central Europe and the Baltic States. Washington D.C., 2007. Yerdelen, Ferda. Panel Veri Ekonometrisi Stata Uygulamalı. İstanbul: Beta Publications, 2013.Zhang, Xiaoba ve Zhang, Kevin. “How Does Globalization Affect Regional Inequality within A Developing Country? Evidence from China”. The Journal of Development Studies. Vol. 39, No.4, 2003, pp. 47-67.Zhu, Susan Chu and Trefler, Daniel. “Trade and Inequality in Developing Countries: A General Equilibrium Analysis”. Journal of International Economics. Vol. 65, 2005, pp.21-48.