The effects of public expenditures on income distribution: The case of Turkey

The most important of the state's intervention purposes in the economy is undoubtedly to ensure fair income distribution and wealth distribution. Income distribution inequalities are among the fundamental economic problems that are difficult to solve by free market actors and that the state must intervene in. Otherwise, inequalities in income distribution bring about negative effects not only on the economy but also on many areas such as social, political, etc. Public expenditures are at the forefront of the state's intervention tools in order to ensure justice in income distribution. Public expenditures have an indirect effect on income distribution based on their effects on macroeconomic factors. However, public expenditures also have direct effects on income distribution. Education expenditures, health expenditures, social security and social assistance expenditures, defense expenditures, and investment expenditures, which are subcomponents of public expenditures, are used to reduce income distribution inequality. Accordingly, the main motivation of this study is to investigate the causal relationship between total public expenditures and income distribution in Turkey between 2014-2024 across 26 Development Regions. According to the causality test results of Emirmahmutoğlu and Köse (2011), when the panel results are examined, it is determined that there is a one-way causality relationship from public expenditures to income distribution at the regional level in Turkey at the 1% significance level. According to the unit effect results at the regional level, there is a one-way causality relationship from income distribution to public expenditures for the TR32 (Aydın, Denizli, Muğla) and TR83 (Samsun, Tokat, Çorum, Amasya) regions; a one-way causality relationship from public expenditures to income distribution was determined for TR31 (İzmir), TR62 (Adana, Mersin), TR63 (Hatay, Kahramanmaraş, Osmaniye), TR81 (Zonguldak, Karabük, Bartın), TR82 (Kastamonu, Çankırı, Sinop), TR90 (Trabzon, Ordu, Giresun, Rize, Artvin, Gümüşhane), TRC1 (Gaziantep, Adıyaman, Kilis) and TRC3 (Mardin, Batman, Şırnak, Siirt). Keywords: Income Distribution, Public Expenditures, Panel Data Analysis.