The relationship of income inequality, poverty and economic growth in the 21st century: Countries with different income groups an empirical analysis

In this study, the relations between income inequality, poverty and economic growth, which are very important for the economics literature from the past to the present, are discussed in a broad perspective theoretically and empirically. When we look at the literature, it is seen that although many studies have been made on the subject, a definite consensus has not been reached. The main problem on the subject is that poverty and income inequality are increasing day by day, even in developed countries in the 21st century. The reason for making this thesis is the desire to contribute to the analysis of this important problem and to reduce the disagreements in the literature about the solutions. The selection of this topic is very important in terms of making a broad theoretical and empirical analysis of the relations between poverty, income inequality and economic growth in developed, developing and underdeveloped countries. According to the results of the empirical analyzes to be made in this research, it is aimed to present various policy proposals for reducing the high level of income inequality and poverty, especially in developing and underdeveloped countries.The empirical analysis in the study was made with the panel data method based on the data of the 2000-2018 period, and it was made with three different models and for three country groups determined as developed, developing and underdeveloped countries by using the World Bank's Atlas Method. In these models, income inequality is represented by the Gini coefficient, the poverty head index, and economic growth is represented by per capita national income as the dependent variable. Arthur Okun's misery index, human development index and democracy index were selected as independent variables. In the panel data analysis, after the cross-section dependency test and as a result, the necessary actions were made, the panel regression test was applied to the data. These tests showed that the effect of the variables differed from each other according to income groups and models. Then, Durbin-Hausman cointegration test was performed to determine whether there are short- and long-term relationships between dependent and independent variables in the models. While no short-term relationships were found between the variables, they were found to be related in the long-term. Finally, Dumitrescu-Hurlin causality test was performed to show the causality relationships between the variables and it was determined that there were unidirectional and bidirectional causality between them. In this thesis, it has been revealed that the problem of income inequality and poverty has deepened in developed countries as well as underdeveloped and developing countries in the globalizing world of the 21st century.According to the results, it has been concluded that poverty and income inequality can be reduced by measures such as increasing national income per capita in developing and undeveloped countries, strengthening adherence to law and democracy, making reforms and improvements that increase the human development index, reducing unemployment and inflation, which are included in the components of the misery index. In developed countries; it was concluded that per capita income and human development index reduced income inequalities, while increases in inflation and unemployment affected income inequality and poverty negatively. It has been revealed that while the increases in the Gini coefficient and the poverty index in developed countries decrease the per capita national income, the increase in the human development index increases the per capita income. In addition, it has been concluded that the increase in national income per capita is an important factor in reducing income inequality and poverty in developing and underdeveloped countries. The results of the analysis of this thesis study were found to be compatible with other studies in the literature.In the light of these results, for developed, developing and undeveloped countries, many economic, social, political and institutional policy suggestions have been made such as a tax system that is less gradual than the rich rather than the poor, a negative income tax policy, transfer payments and welfare policies, anti-inflation and employment-increasing public policies, agricultural and land reform, increasing support for education expenditures that increase people's individual income, a contemporary legal system, anti-corruption policies and reducing income inequality and poverty, such as the robot tax.