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Intergenerational Income Elasticity in Turkey:A New Estimate

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  • Murat Anıl Mercan

    (Faculty of Business Administration, Department of Economics, Gebze Technical University, Kocaeli, Turkey)

  • Hande Barlin

    (Faculty of Business Administration, Department of Economics, Gebze Technical University, Kocaeli, Turkey)

Abstract

Social scientists have been intrigued by the relationship between generations based on different characteristics. Economists, has been especially interested in measuring intergenerational income elasticity, which looks at the relationship of parents and that of their children when they become adults and gives clue on trends of income inequality. Most of the literature concentrates on the experiences of developed countries and measurement issues. Nevertheless, new studies concerning intergenerational income elasticity is being undertaken in developing countries as the data become increasingly available for these countries. In this vein, there is only one previous study that investigates intergenerational income elasticity for Turkey. Mercan (2012) finds that intergenerational income elasticity is around 0.1 in Turkey, which depicts Turkey as a highly mobile country meaning that children of poor parents have a higher likelihood to have a better income status. However, his study does not depend on a longitudinal dataset, which might make Mercan’s (2012) estimate biased. Following Solon (1992) in using OLS for lower bound and instrumental variable (IV) for upper bound, this study puts forth a new estimate, which relies on a nationally representative and longitudinal dataset for Turkey. The study's estimate for intergenerational income elasticity varies between 0.3 and 0.6, which is much higher than the result of Mercan (2012), indicating that Turkey is a less mobile country than previously foreseen. Key Words: Intergenerational mobility, income, earnings

Suggested Citation

  • Murat Anıl Mercan & Hande Barlin, 2016. "Intergenerational Income Elasticity in Turkey:A New Estimate," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 5(3), pages 30-37, April.
  • Handle: RePEc:rbs:ijbrss:v:5:y:2016:i:3:p:30-37
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    References listed on IDEAS

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    1. Honge Gong & Andrew Leigh & Xin Meng, 2012. "Intergenerational Income Mobility In Urban China," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(3), pages 481-503, September.
    2. Nunez Javier I & Miranda Leslie, 2010. "Intergenerational Income Mobility in a Less-Developed, High-Inequality Context: The Case of Chile," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-17, April.
    3. Fengye Sun & Atsuko Ueda, 2015. "Intergenerational earnings mobility in Taiwan," Economics Bulletin, AccessEcon, vol. 35(1), pages 187-197.
    4. Dunn Christopher E, 2007. "The Intergenerational Transmission of Lifetime Earnings: Evidence from Brazil," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(2), pages 1-42, October.
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