THE NEXUS BETWEEN INCOME INEQUALITY, INTERNATIONAL REMITTANCES AND ECONOMIC GROWTH IN TURKEY

Buhari Doğan, Muhlis Can, Osman Değer

Abstract


In this study, the relationship between income inequality, remittances and economic growth in Turkey are analyzed using the annual data for 1977-2014 period. The ARDL method and Granger causality tests are used for this analysis. The empirical findings of the research suggest that the series are cointegrated and they move together in long-term. Also, income inequality and international remittances contribute to economic growth both in the long and short-term. The results of the Granger causality test show that there is a unidirectional causality running from economic growth to remittances and from remittances to income inequality

Keywords


Income Inequality, Remittances, Economic Growth, ARDL Bounds Testing

Full Text:

PDF

References


Acharya, C. P., and Leon-Gonzalez, R., (2012) The Impact of Remittance on Poverty and Inequality: A Micro-Simulation Study for Nepal. National Graduate Institute for Policy Studies, 7-22-1 Roppongi, Minato-ku, Tokyo, Japan, pp.106-8677.

Acosta, P., Calderón, C., Fajnzylber, P., and López, H., (2006) ‘Remittances and development in Latin America’, The World Economy, 29, pp.957-987.

Adams, R., (1989) ‘Workers remittances and inequality in rural Egypt’, Economic Development and Cultural Change 38(1), pp.45-71.

Adams, R.H. Jr., (2004) ‘Economic growth, inequality and poverty: Estimating the growth elasticity of poverty’, World Development 32, pp.1989–2014.

Adams, R.H., Jr. (1991) The effects of international remittance on poverty, inequality and development in rural Egypt. Research Report 86, Washington DC, IFPRI.

Adger, W. N., (1999) ‘Exploring income inequality in rural coastal Viet Nam’ Journal of Development Studies 35(5), pp.96–119.

Ahlburg, D. A., (1996) ‘Remittances and the income distribution in Tonga’, Population Research and Policy Review 15(4), pp.391–400.

Bahmani-Oskooee, M., Hegerty S. W., Wilmeth, H., (2008) ‘Short-run and long-run determinants of income inequality: Evidence from 16 countries’, Journal of Post Keynesian Economics 30, pp.463-484.

Barham, B., Boucher, S, (1998) ‘Migration, remittances and inequality: Estimating the net effects of migration on income distribution’, Journal of Development Economics 55(2), pp.307–331.

Binatli, A. O., (2012) ‘Growth and Income Inequality: A Comparative Analysis’ Economics Research International. doi:10.1155/2012/569890.

Dreher, A., Gaston, N., and Martens, P. (2008) Measuring globalisation: Gauging its consequences. Springer Verlag, New York.

Castelló-Climent, A., (2010) ‘Inequality and growth in advanced economies: an empirical investigation’, Journal of Economic Inequality, 8, pp.293–321.

Easterly, W., (2001) ‘The lost decade: Developing countries stagnation in spite of policy Reform 1980-1990’, Journal of Economic Growth 6, pp.135-157.

Engle, Robert F. and W.J. Clive Granger, (1987) ‘Co-integration and error correction: representation, estimation and testing’, Econometrica, 55(2), pp.251-276.

Forbes, J. K., (2000) ‘A Reassessment of the Relationship Between Inequality and Growth’, American Economic Review, 90 (4), pp.869-887.

Frank, M. W., (2011) ‘Inequality and Growth in the United States: Evidence from a new state level panel of Income Inequality Measures’ Economic Inquiry, 47 (1), pp.55-68.

Galor, O., and Moav, O., (2004) ‘From physical to human capital accumulation: inequality and the process of development’, Review of Economic Studies, 71(4), pp.1001-1026.

Gaston, N., Rajaguru, G., (2009) ‘The long-run determinants of Australian income inequality’, Economic Record 85(270), pp.260-275.

Granger, C.W.J. (1969) ‘Investigating Causal Relations by Econometric Models and Cross-spectral Methods’, Econometrica, 37(3), pp.424-438.

Handa, S., and King, D., (1997) ‘Structural adjustment policies, income distribution and poverty: A review of the Jamaican experience’, World Development 25(6), pp.915–930.1 4

THE NEXUS BETWEEN INCOME INEQUALITY, INTERNATIONAL REMITTANCES AND ECONOMIC ...

Herzer, D., Vollmer, S., (2012) ‘Inequality and growth: evidence from panel cointegration’, Journal of Economic Inequality, 10, pp.489-503.

Hsing, Y., (2005) ‘Economic growth and income inequality: the case of the US. International’, Journal of Social Economics, 32, pp.639-647.

Jalil, A., (2012) ‘Modeling income inequality and openness in the framework of Kuznets curve: New evidence from china’, Economic Modelling, 29, pp.309-315.

Johansen, S. and K. Juselıus, (1990) ‘Maximum likelihood estimation and inferences on cointegration-with applications to the demand for money’, Oxford Bulletin of Economics and Statistics, 52, pp.169-210.

Johansen, S. (1988) ‘Statistical analysis of cointegration vectors’, Journal of Economic Dynamics and Control, 12, pp.231-254.

Jong, C. S., (2010) A Reassessment the Relationship between Growth and Inequality: Evidence from New Data. Institute for Monetary and Economic Research, The Bank of Korea, 110, Namdaemunro 3-Ga, Jung-Gu, Seoul, 100-794, Republic of Korea.

Koechlin, V., and Leon, G., (2007) ‘International remittances and income inequality: An empirical investigation’, Journal of Economic Policy Reform 10(2), pp.123-141.

Kuznets, S. (1955) ‘Economic growth and income inequality’, American Economic Review, 45(1), pp.1–28.

Lerman, J. P.,and Feldman, S., (1998) ‘Non-farm activity and rural household income: Evidence from Philippine microdata’, Economic Development and Cultural Change 46(4), pp.789–806.

Li, H. (1998) ‘Explaining international and intertemporal variations in income inequality’, Economic Journal, 108(446), pp.26–43.

McKenzie, D and Rapoport, H, (2007) ‘Network effects and the dynamics of migration and inequality: theory and evidence from Mexico’ Journal of Development Economics, 84, pp.1–24.

Meschi, E., and Vivarelli, M., (2009) ‘Trade and income inequality in developing countries’ World Development 37, pp.287-302.

Morley, B. (2006) ‘Causality between economic growth and immigration: An ARDL bound testing approach’, Economic Letters, 90, pp.72-76.

Narayan, P.K. (2005) ‘The saving and investment nexus for china: Evidence from cointegration tests’, Applied Economics, 37(17), pp.1979-1990.

Nguyen, V. C., (2008) ‘Do Foreign Remittances Matter to Poverty and Inequality? Evidence from Vietnam’, Economics Bulletin, 15(1), pp.1-11.

Pesaran, M., Shin Y. and R.J. Smith, (2001) ‘Bounds testing approaches to the analysis of level relationships’ Journal of Applied Econometrics, 16, pp.289-326.

Pede, V. O., Sparks, A. H., Mckinley, J. D., (2012). Regional Income Inequality and Economic Growth: A Spatial Econometrics Analysis for Provinces in the Philippines. Social Sciences Division, International Rice Research Institute, DAPO Box 7777, Metro Manila, Philippines.

Petersen L.(2012) Remittances and Inequality a Case Study of Albania. Bachelor Thesis, Department of Economics, Lund University. 912.

Qureshi, M. S., Wan, G. (2008) ‘Distributional consequences of globalisation: Empirical evidence from panel data’ Journal of Development Studies 44(10), pp.1424-1449.

Rodriguez, E. R., (1998) ‘International migration and income distribution in the Philippines’, Economic Development and Cultural Change 46(2), pp.329–350.

Roine, J., Vlachos, J., and Waldenström, D., (2009) ‘The long-run determinants of inequality: What can we learn from top income data?’ Journal of Public Economics 93, pp.974-988.

Shahbaz, M. Rehman, I.U. and Mahdzan, N.S.A. (2014) ‘Linkages between income inequality, international remittances and economic growth in Pakistan’, Qual Quant. Vol. 48(3), pp.1511-1535.

Shahbaz, M., (2010) ‘Income inequality-economic growth and non-linearity: a case of Pakistan’, International Journal of Social Sciences, 37 (8), pp.613-636.

Stark, O., Taylor, J. E.,and Yitzhaki, S., (1988) ‘Migration, remittances and inequality: A sensitivity analysis using the extended Gini index’, Journal of Development Economics 28(3), pp.309–322.

Tang, T. C., (2003) ‘Japanese aggregate import demand function: Reassessment from the Bounds’ testing approach’, Japan and World Economy, 15, pp.419-436.

Tarı, R. (2011) Ekonometri, Umuttepe Yayınları, 11. Baskı, Kocaeli.

Taylor, J. E., (1992) ‘Remittances and inequality reconsidered: Direct, indirect and intertemporal effects’, Journal of Policy Modeling 4(2), pp.187-208.

Taylor J.E., and Wyatt, T.J., (1996) ‘The shadow value of migrant remittances, income and inequality in a household-farm economy’, Journal of Development Studies 32(6), pp.899-912.

Waheed, O. O., Shittu, A. M., (2012) ‘Remittances and income inequality in rural Nigeria’, E3 Journal of Business Management and Economics, 3, pp.210-221.

Zouheir, A., Imen, M. S., (2012) ‘Economic Growth and Income Inequality: Empirical Evidence from North African Countries’, Asian Economic and Financial Review, 2 (1), pp.142-154.


Refbacks

  • There are currently no refbacks.