Abstract:

This study examines the income convergence among the 81 provinces of Turkey from the perspective of the income distribution. Unit root tests with a structural break, OLS time-series regression, variance, and coefficient of variation analysis are employed to investigate the beta and sigma income convergences over the 1992-2019 period. The empirical results indicate strong convergence to the average for the relatively high-income provinces and strong divergence from the average for the relatively low-income provinces. In addition, a closing income gap among provinces is observed in the economic slowdown periods 1993-1994, 2001-2002, 2008-2009 while the income distribution gets worse in the high-growth periods. In the Turkish economy, income differences between provinces have been decreasing in parallel with the slowing economic growth since 2013. This study differs from other studies in the literature on three points. First, the combined use of beta and sigma income convergence approaches has created an alternative tool to analyze the income inequality concept. Secondly, approximately doubling the number of observations in the newly used data set contributed positively to the accuracy of the results of the empirical study. Third, the inclusion of events that may cause structural breaks in the economy over the period 1992-2019, increased the reliability of the outputs of the study.

Keywords: