Dynamics of poverty and income distribution: an application to oecd countries

In this study, the effects of growth and human development levels on income distribution and the effect of growth and income distribution on human development level were tried to be determined by using panel data analysis method from 1990 to 2015 for 24 OECD countries. In the study, firstly, the cross-sectional dependence of the variables in the established models was tested. According to the test results, cross-sectional dependence was found between the series. Pesaran (2007) CIPS unit root test was applied due to the horizontal cross-sectional dependence among the variables. In this context, non-stationary level excluding consumer price index (INFR) and economic growth (GROWTH), human development index (HDI), (GINI) coefficient, unemployment rates (UNEMPL), exchange rates (ER), trade openness (OPENN), Foreign direct investment (FDI) and tax burden (TAX) series became stable when the first difference was taken. Then, Hausman test, F test and Breusch-Pagan LM tests were applied in order to test which of the pooled, random effects and fixed effects models would be appropriate to use. The reliability of the results obtained from the estimators was made by basic diagnostic tests, and it was found that most of the models established as a result of these tests had varying variance and autocorrelation problems, and in these cases the resistant estimator "Driscoll-Kraay (1998) was used. In addition, in order to test the existence and direction of the relationship between income inequality, economic growth and human development index "Emirmahmutoglu and Kose (2011) Panel Fisher causality tests" were applied. Findings can be summarized as follows: a) There was a negative relationship between economic growth and the GINI index, in addition, there was a positive relationship between economic growth and unemployment, inflation, foreign direct investment and trade openness and GINI coefficient; b) There is a positive relationship between economic growth and human development index. This means that as economic growth increases, the development levels of OECD countries increase, in other words, poverty decreases. In addition, as the trade openness increases, the human development index also increases; c) No significant relationship was found between income inequality and human development in models using SEM and REM estimators; d) According to Emirmahmutoglu and Kose (2011) Panel Fisher causality test, a one-way relationship from human development index and economic growth to GINI coefficient was found.