Abstract
The simultaneous treatment of growth, inequality and poverty is useful from a policy perspective in the sense that it enables decision makers to choose the combination of mutually beneficial policies that have positive impact on all three variables. Also, public policies tend to affect inequality mainly indirectly through their impact on growth and poverty. Turkey, as being one of the developing countries, has high-income inequality since its Gini coefficient was around 0.40 in last decades according to Turkish Statistical Institute. Its income distribution has been improving slightly; however, it is still so much behind the developed countries’ levels. Inequalities in the wealth distribution can have significant negative impacts on growth where credit market constraints prevent the poor from making productive indivisible investments. This can be overcome by the provision of credit or redistribution of assets by taxes and other interventions. Redistribution of assets not only causes to increase growth and reduce inequality, but also reduces the poverty directly by insuring the poor against the macroeconomic shocks or volatilities.
Highlights
The distribution of income within a country is important for several reasons
The simultaneous treatment of growth, inequality and poverty is useful from a policy perspective in the sense that it enables decision makers to choose the combination of mutually beneficial policies that have positive impact on all three variables
As being one of the developing countries, has high-income inequality since its Gini coefficient was around 0.40 in last decades according to Turkish Statistical Institute
Summary
The distribution of income within a country is important for several reasons. Inequalities may create incentives for people to improve their situation through work, innovation or acquiring new skills. It may be an obstacle to growth and reducing poverty. Crime and social exclusion are often seen as linked to inequalities of income distribution. Most economists would agree that some inequality is essential to a market economy [1]. Inequality is necessary to provide rewards to those who invest in their skills as well as to those who take risk and responsibility [2]. Any attempt at redistribution must be judged against its effects on essential economic incentives that allocate
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