Determinants of income distribution in Turkey

The primary purpose of this study is to investigate the economic and institutional determinants of income distribution for Turkey. In this study, the Gini coefficient is used as a dependent variable to represent income inequality, while economic factors such as economic growth, unemployment, social transfer expenditures, and institutional factors such as democracy and corruption are used as independent variables. The empirical findings obtained by using the ARDL bound test and the annual data covering the period 1988-2016 can be listed as follows: i) There is a long-run relationship (cointegration) between the variables. ii) Increases in the level of democracy and social transfer expenditures reduce income inequality in the long run. iii) Increases in economic growth and unemployment and betterment in the corruption enhance income inequality in the long run. iv) It has been detected that the most important determinants of income inequality are economic growth, social transfer expenditures, unemployment, democracy, and corruption, respectively. Therefore, policymakers in Turkey should design policies that will reduce unemployment and increase the share of social transfer expenditures in total public spending, the level of democracy, and human capital. Keywords: Democracy, Economic Growth, Income Distribution, Unemployment, Corruption