IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/9300.html
   My bibliography  Save this paper

What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey ?

Author

Listed:
  • Cuevas,Pablo Facundo
  • Lucchetti,Leonardo Ramiro
  • Nebiler,Metin

Abstract

Fiscal policy is central to not only macroeconomic stability and growth, but also to poverty and inequality reduction. This paper provides the most comprehensive assessment of the distributional incidence of Turkey’s fiscal policy to date. It analyzes the combined and individual incidence of direct and indirect taxes, transfers, and social spending and benchmarks Turkey’s achievements against peer countries. The results show that fiscal policy significantly reduces income inequality in Turkey, driven by social spending on education and health, and complemented by direct taxes and transfer schemes that countervail the inequality-increasing impact of indirect taxes. At the bottom of the income distribution, targeted transfers are insufficient to compensate for the effect of taxes, resulting in net increases in poverty. In the context of upper-middle-income countries, Turkey’s performance is below the median. This is driven by the relatively larger negative impacts of indirect taxes and the more limited positive impacts of direct transfers and taxes. From a policy perspective, the paper contributes to identifying entry points for improving the equity impact of the fiscal package. Among these, targeting the minimum subsistence allowance (AGI) program toward the poor could be an efficient way forward. More broadly, the study represents a platform to simulate the distributional implications of a variety of fiscal changes to inform stakeholders and the policy debate.

Suggested Citation

  • Cuevas,Pablo Facundo & Lucchetti,Leonardo Ramiro & Nebiler,Metin, 2020. "What Are the Poverty and Inequality Impacts of Fiscal Policy in Turkey ?," Policy Research Working Paper Series 9300, The World Bank.
  • Handle: RePEc:wbk:wbrwps:9300
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/785891593010082785/pdf/What-Are-the-Poverty-and-Inequality-Impacts-of-Fiscal-Policy-in-Turkey.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nora Lustig, 2017. "Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries," Commitment to Equity (CEQ) Working Paper Series 54, Tulane University, Department of Economics.
    2. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
    3. Inchauste Comboni,Maria Gabriela & Rubil,Ivica, 2017. "The distributional impact of taxes and social spending in Croatia," Policy Research Working Paper Series 8203, The World Bank.
    4. Caner, Asena & Okten, Cagla, 2013. "Higher education in Turkey: Subsidizing the rich or the poor?," Economics of Education Review, Elsevier, vol. 35(C), pages 75-92.
    5. Goraus Tanska,Karolina Marta & Inchauste Comboni,Maria Gabriela, 2016. "The distributional impact of taxes and transfers in Poland," Policy Research Working Paper Series 7787, The World Bank.
    6. Branko Milanovic & Sean Higgins & Nora Lustig & Whitney Ruble & Timothy M. Smeeding, 2016. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62, pages 22-46, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. P. Facundo Cuevas & Leonardo Lucchetti & Metin Nebiler, 2020. "What are the Poverty and Inequality Impacts of Fiscal Policy in Turkey?," Commitment to Equity (CEQ) Working Paper Series 100, Tulane University, Department of Economics.
    2. Lustig, Nora & Martinez Pabon, Valentina & Pessino, Carola, 2023. "Fiscal Policy, Income Redistribution, and Poverty Reduction in Latin America," IDB Publications (Working Papers) 13193, Inter-American Development Bank.
    3. Lustig, Nora & Martinez Pabon, Valentina & Pessino, Carola, 2023. "Fiscal policy, income redistribution, and poverty reduction in Latin America," LSE Research Online Documents on Economics 120683, London School of Economics and Political Science, LSE Library.
    4. Higgins, Sean & Lustig, Nora, 2016. "Can a poverty-reducing and progressive tax and transfer system hurt the poor?," Journal of Development Economics, Elsevier, vol. 122(C), pages 63-75.
    5. Brzeziński, Michał & Myck, Michal & Najsztub, Mateusz, 2019. "Reevaluating Distributional Consequences of the Transition to Market Economy in Poland: New Results from Combined Household Survey and Tax Return Data," IZA Discussion Papers 12734, Institute of Labor Economics (IZA).
    6. Sean Higgins & Nora Lustig, 2015. "Can Poverty-Reducing and Progressive Tax and Transfer System Hurt the Poor?," Commitment to Equity (CEQ) Working Paper Series 1333, Tulane University, Department of Economics.
    7. Perugini, Cristiano, 2020. "Patterns and drivers of household income dynamics in Russia: The role of access to credit," BOFIT Discussion Papers 11/2020, Bank of Finland Institute for Emerging Economies (BOFIT).
    8. Juan C. Palomino & Juan G. Rodríguez & Raquel Sebastian, 2023. "The COVID-19 shock on the labour market: poverty and inequality effects across Spanish regions," Regional Studies, Taylor & Francis Journals, vol. 57(5), pages 814-828, May.
    9. Marijke Verpoorten, 2014. "Growth, poverty and inequality in Rwanda: a broad perspective," Working Papers of LICOS - Centre for Institutions and Economic Performance 490896, KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance.
    10. Stephen P. Jenkins & Philippe Van Kerm, 2016. "Assessing Individual Income Growth," Economica, London School of Economics and Political Science, vol. 83(332), pages 679-703, October.
    11. Isaac K. Ofori, 2021. "Towards Building Shared Prosperity in Sub-Saharan Africa: How Does the Effect of Economic Integration Compare to Social Equity Policies?," Research Africa Network Working Papers 21/045, Research Africa Network (RAN).
    12. Nora Lustig & Florencia Amábile & Marisa Bucheli & George Gray Molina & Sean Higgins & Miguel Jaramillo & Wilson Jiménez Pozo & Veronica Paz Arauco & Claudiney Pereira & Carola Pessino & Máximo Rossi , 2014. "El impacto del sistema tributario y del gasto social sobre la desigualdad y la pobreza en Argentina, Bolivia, Brasil, México, Perú y Uruguay: Un panorama general," Commitment to Equity (CEQ) Working Paper Series 1313S, Tulane University, Department of Economics.
    13. Francisco H. G. Ferreira & Vito Peragine, 2015. "Equality of opportunity: Theory and evidence," Working Papers 359, ECINEQ, Society for the Study of Economic Inequality.
    14. B. Essama‐Nssah & Peter J. Lambert, 2009. "Measuring Pro‐Poorness: A Unifying Approach With New Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 752-778, September.
    15. German Feierherd & Patricio Larroulet & Wei Long, & Nora Lustig, 2021. "The Pink Tide and Inequality in Latin America," Working Papers 2105, Tulane University, Department of Economics.
    16. Christoph Dörffel & Sebastian Schuhmann, 2020. "What is Inclusive Development? Introducing the Multidimensional Inclusiveness Index," Jena Economics Research Papers 2020-015, Friedrich-Schiller-University Jena.
    17. Valensisi, Giovanni & Gauci, Adrian, 2013. "Graduated without passing? The employment dimension and LDCs' prospects under the Istanbul Programme of Action," MPRA Paper 86966, University Library of Munich, Germany.
    18. Kraay, Aart, 2004. "When is growth pro-poor? Cross-country evidence," Policy Research Working Paper Series 3225, The World Bank.
    19. Francis Teal, 2006. "Consumption and welfare in Ghana in the 1990s," Journal of Development Studies, Taylor & Francis Journals, vol. 42(7), pages 1252-1269.
    20. Simplice A. Asongu & Jacinta C. Nwachukwu, 2017. "Recent finance advances in information technology for inclusive development: a survey," Research Africa Network Working Papers 17/009, Research Africa Network (RAN).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:9300. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.