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

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

Sami Taban , Mehmet Şengür

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.

Keywords

Income distribution, economic development, income inequality, economic growth, Turkey

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