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Internationalisation, growth and pay inequality: a cointegration analysis for Turkey, 1970--2007

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  • Adem Y. Elveren
  • Ibrahim Örnek
  • Günay Akel

Abstract

The nature of the internationalisation-growth-inequality nexus is very complex; and therefore, not surprisingly, there is no consensus on whether increasing openness to trade leads to higher inequality or not -- in fact, there is even no full understanding on the impact of the openness on the economic growth. In the case of Turkey it is observed that there is relatively little empirical work that addresses the issue of inequality. Considering this fact, the study aims to provide some more evidence on the complex relationship between trade openness, foreign direct investment, economic growth and pay inequality by utilising a combination of different Theil Indices of pay inequality. The paper utilises the Johansen Cointegration and Granger Causality methods. Our findings yield that higher economic growth resulting from trade openness comes with higher pay inequality.

Suggested Citation

  • Adem Y. Elveren & Ibrahim Örnek & Günay Akel, 2012. "Internationalisation, growth and pay inequality: a cointegration analysis for Turkey, 1970--2007," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(5), pages 579-595, September.
  • Handle: RePEc:taf:irapec:v:26:y:2012:i:5:p:579-595
    DOI: 10.1080/02692171.2011.624499
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    References listed on IDEAS

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    1. Meschi, Elena & Taymaz, Erol & Vivarelli, Marco, 2008. "Trade Openness and the Demand for Skills: Evidence from Turkish Microdata," IZA Discussion Papers 3887, Institute of Labor Economics (IZA).
    2. Deepak Bhattasali & Shantong Li & Will Martin, 2004. "China and the WTO : Accession, Policy Reform, and Poverty Reduction Strategies," World Bank Publications - Books, The World Bank Group, number 14920, December.
    3. Gourdon, Julien, 2006. "Openness and Inequality in Developing Countries: A New Look at the Evidence," MPRA Paper 4176, University Library of Munich, Germany.
    4. Giovanni Andrea Cornia & Sampsa Kiiski, 2001. "Trends in Income Distribution in the Post-World War II Period: Evidence and Interpretation," WIDER Working Paper Series DP2001-89, World Institute for Development Economic Research (UNU-WIDER).
    5. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
    6. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
    7. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
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    Cited by:

    1. Domenico Rossignoli, 2015. "Too many and too much? Special-interest groups and inequality at the turn of the century," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 130(3), pages 337-366.
    2. KARGI, Bilal, 2014. "Portfolio in Turkish Economy, and A Long Termed Relation Between Foreign Direct Investments and The Growth, and The Structural Breakage Analysis (1980-2012)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 70-81.

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