Abstract:

This study aims to determine whether income inequality in Turkey is an obstacle in economic development or not. For this purpose, the gini coefficient are used as a measure income inequality and real GDP is used as an economic growth indicator between the years of 1990-2015. Johansen cointegration method is utilized in the analysis of the study. Co-integration analysis has shown a longterm relationship between the gini coefficient and economic growth. In order to determine the direction of causality, the error correction model is applied. The findings indicate that the direction of causality runs from economic growth to gini coefficient. This result shows that economic growth is an important factor in the reduction of income inequality. Empirical result reveals also that the reduction of income inequality through economic growth is the crucial factor for Turkey’s economic development.

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