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Concentration of income inequality on the basis of Palma ratio and income deciles of Turkey on national and regional level

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  • Tahsin, Emine

Abstract

This paper aims to focus on income inequality concentration based on Palma ratio as an income inequality metrics and in this regard change in income deciles of Turkey both on national ( for period 2002-2017) and NUTS-1 level for period of 2006-2017 would be investigated. In this context cons and pros of metrics would be considered hence this study would not suggest that Palma ratio is the best inequality metrics that explains inequalities. However analytical framework of the Palma ratio would be taken into consideration in order to focus on concentration of income inequality. So that possibility of exploring dimensions of hidden inequality that could not be asserted by Gini coefficient, in case of Turkey would be investigated. Given that, primarily the Gini coefficient series based on Turkstat and Povcal data would be compared for period 2002-2017 for Turkey. Following this path, the Palma ratio; the ratio of the share of top 10 percent income to the bottom 40 percent income (D10/D1-D4) would be investigated both on national and regional level. First of all based on studies that refers to Palma ratio descriptive and explanatory statistics would be utilized. For analyzing robustness of Palma ratio and investigating importance of change in relevant income deciles, mean and percentage shares’ would be considered. Within this context rather than analyzing absolute improvement, proportional change in income deciles, Gini coefficient and Palma ratio with respect to total mean income and GDP per capita income(Turkstat 2004-2016)would be estimated. While analyzing descriptive statistics for both income deciles and mean income data, existence of “outliers” would be investigated. For this purpose in order to examine regional disparities,on the basis of income deciles’ percentage share of relevant deciles would be estimated by Mahalanobis distance calculation. Furthermore in order to analyze concentration of income inequality, decomposition of Gini coefficient values based on sub-population grouping (regions) would be evaluated. In doing so between(Bahattacharya and Mahalanobis,1976, Giorgi,2011) and within group decomposition (Bellu and Liberati, 2006) analysis would be considered for mean incomes and Gini coefficient values’. Based on these results, it would be suggested that investigation based on Palma ratio and income deciles would permit more detailed analysis of concentration of income inequality. Opposite tails ( the richest D10 and the poorest D1-D4) of Turkey’s provide us to explain asymmetries in income distribution dynamics. Robustness of Palma ratio would be evaluated while it would be underlined that apart from overlapping trend between Palma ratio and Gini coefficient, D10 income deciles and Gini coefficient has strong correlation that determines concentration of income inequality.

Suggested Citation

  • Tahsin, Emine, 2019. "Concentration of income inequality on the basis of Palma ratio and income deciles of Turkey on national and regional level," MPRA Paper 92490, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92490
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    References listed on IDEAS

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    More about this item

    Keywords

    Income inequality; Palma ratio; Regional income distribution in case of Turkey; Mahallonobis distance calculation; Gini decomposition; Income inequality concentration;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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