Regional income inequality in Turkey: Covergence analysis on the basis of Level-2 regions

Regional income inequality is important for economic development and development. Due to the differences in development experienced between regions, income is not distributed evenly in each region and causes the problem of regional income inequality. In terms of the neoclassical growth model, interregional differences are a short-term phenomenon, and these differences will disappear in the long run. Convergence hypothesis, there will be a convergence in per capita income over the long term, as regions that are relatively poor will realize a faster growth rate than rich regions due to the reduced marginal efficiency of capital. Therefore, regional income inequality will decrease over time with the rapid growth of poor regions. In this study, it was analyzed whether the per capita income of the regions converged with each other over time with the club convergence technique developed by Phillips and Sul (2007) for 26 Dec-2 regions in Turkey between 2004 and 2020. As a result of the analysis, it was determined that there is no general convergence for the 26 Level-2 region in Turkey with the Log t test statistic. On the other hand, although convergence could not be determined for the entire panel, it was found that 26 regions in Turkey constitute a total of 7 sub-clubs with club convergence analysis and clustering logic developed by Phillips and Sul (2007). According to the results obtained, 6 convergence clubs and 1 divergence club were found. Keywords: Regional Income Inequality, Convergence, Regional Development