2008 financial crisis and income distribution in Turkey

Abstract

This study provides some new evidence for the 2008–2009 Global Financial Crisis on income inequality in Turkey. Two methodologies were used in the study. The first methodology put forward by Jenkins and Van Kerm (Oxf Econ Pap 58(3):531–548, 2006) uses micro-level data to estimate the relationship of income inequality changes with the pattern of progressive income growth and reshuffling across the income quartiles before and after the crisis. Second, using macro level data across Turkey's regions, a panel data analysis is conducted to examine if the relationship among income inequality, poverty, and income growth has changed after the financial crisis. The panel data model in the double log form for inequality has been estimated for Turkey between 2005 and 2012. The panel data model results show that differential intercept coefficients were statistically not significant, implying that the effect of growth and poverty on inequality has not changed in the crisis period. The fact that the financial crisis has only lasted for two years in Turkey might be the reason for not observing fundamental changes in the pattern of the relationship between income inequality, poverty, and income growth. © 2021, The Author(s), under exclusive licence to Springer Nature B.V.