Income Distribution and Social Expenditures in Turkey


Due to its nature built on uncertainty and chaos, globalization causes severe structural breaks and instabilities in geographies that are not ready for it yet. One of the leading instabilities located within the joint cluster of social, economic, and political areas is the inequality in income distribution. In fact, the distribution of income, which indicates how income is distributed in society, is one of the main causes of large-scale changes and transformations throughout history. With the globalization process, the socioeconomic and political effects of the income distribution increased in terms of speed and level. An increase in income inequality within the country and between countries can have multi-dimensional effects from sociological traumas to political instability. The benchmark of the differentiation of economic systems is 'how income is distributed', and income distribution's being fair is among the sine qua non in terms of inclusive and sustainable economic growth and social welfare. Today, almost all countries take measures to fight this problem and try to suppress the effects of it by making social expenditures. The present study provides a symmetrical and asymmetrical investigation of the causality relations between income distribution and social expenditures in Turkey. The study uses the causality test developed by Dolado-Lütkepohl and according to the findings of the symmetrical analysis of the study, the presence of the causality relation was found from social expenditures to income distribution. Upon reviewing the asymmetrical relations in the center of positive and negative shocks, it was determined that the increases and decreases in social expenditures have a reverse effect on income distribution while the deteriorations in income distribution reduce social expenditures and thus is able to trigger a vicious cycle. These results indicate that social expenditures in Turkey are significant and effective in fighting inequality in income distribution and hint that a reduction in social expenditures may have a negative effect on income inequality and thus on macroeconomic stability.


Keywords


Economics, Social Expenditures, Income Distribution, Asymmetric Dolado-Lütkepohl Causality Test

Author : Musa ÖZTÜRK
Number of pages: 901-912
DOI: http://dx.doi.org/10.29228/TurkishStudies.43353
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Turkish Studies-Economics,Finance,Politics
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