Recent Trends in Factor Contributions to Household Income Inequality in Turkey

Abstract

Making use of official survey data, we examine the evolution of household income inequality in Turkey during the past fifteen years. We observe the contributions to inequality of the main components of household income, namely labor market earnings, non-wage income, and imputed rents. In an effort to obtain clues regarding the gender related socio-economic developments of the period, we also distinguish between the earnings of male and female household members. We find that the earnings inequality among women continues to be higher than among men, and that the gender earnings gap is smaller among wage and salary workers than among the self-employed. Household-level analysis reveals that female earnings have a dis-equalizing impact on household inequality while non-labor income no longer contributes to inequality as much as it did in the 1990s, possibly due to the substantial decline in the interest rates. The change in the sign of the correlation between non-labor income and labor market earnings between 1994 and 2008 suggests that formal and informal redistributive policies of the governments may have been the main factor behind the considerable decline in household income inequality during this period.