IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkwp/843.html
   My bibliography  Save this paper

The impact of a customs union with the EU on Turkey's welfare, employment and income distribution: An AGE analysis

Author

Listed:
  • De Santis, Roberto A.

Abstract

The economic implications and the income distribution effects of the CU between Turkey and the EU have been studied by applying a general equilibrium model to the Turkish economy. The numerical results show that the CU is not trade diverting. Most importantly, urban (rural) groups are better (worse) off in the scenario with fixed wages, while urban (rural) groups are worse (better) off in the scenario with flexible wages. Despite the owners of basic skilled labour being better off than both the owners of skilled labour and the owners of capital, overall income inequality rises in the scenario with fixed wages, suggesting that analysis on income inequality based on the functional distribution of income and the full employment assumption (i.e. Stolper-Samuelson theorem), might be misleading. In addition, in the case of fixed real wages, the model predicts the creation of 148000 new jobs. Sensitivity analysis seems to support this overall conclusion.

Suggested Citation

  • De Santis, Roberto A., 1997. "The impact of a customs union with the EU on Turkey's welfare, employment and income distribution: An AGE analysis," Kiel Working Papers 843, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:843
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/46779/1/258127171.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mercenier, J., 1992. "Can '1991' Reduce Unemployment in Europe? On Welfare and Employment Effects of Europe's Move to Single Market," Cahiers de recherche 9222, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    2. Frank A. Cowell, 1980. "On the Structure of Additive Inequality Measures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 521-531.
    3. David A. MacPherson & James B. Stewart, 1990. "The Effect of International Competition on Union and Nonunion Wages," ILR Review, Cornell University, ILR School, vol. 43(4), pages 434-446, July.
    4. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404, World Scientific Publishing Co. Pte. Ltd..
    5. Adelman, Irma & Robinson, Sherman, 1989. "Income distribution and development," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 19, pages 949-1003, Elsevier.
    6. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-392, June.
    7. Boadway, Robin W, 1974. "The Welfare Foundations of Cost-Benefit Analysis," Economic Journal, Royal Economic Society, vol. 84(336), pages 926-939, December.
    8. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    9. Borjas, George J & Ramey, Valerie A, 1994. "Time-Series Evidence on the," American Economic Review, American Economic Association, vol. 84(2), pages 10-16, May.
    10. Mercenier, Jean & Yeldan, Erinc, 1997. "On Turkey's trade policy: Is a customs union with Europe enough?," European Economic Review, Elsevier, vol. 41(3-5), pages 871-880, April.
    11. Glewwe, Paul, 1991. "Household equivalence scales and the measurement of inequality : Transfers from the poor to the rich could decrease inequality," Journal of Public Economics, Elsevier, vol. 44(2), pages 211-216, March.
    12. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    13. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
    14. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521319867.
    15. Roberto De Santis & H. Gazi Ozhan, 1997. "Social Accounting Matrix for Turkey 1990," Economic Systems Research, Taylor & Francis Journals, vol. 9(3), pages 281-285.
    16. Robert Z. Lawrence & Matthew J. Slaughter, 1993. "International Trade and American Wages in the 1980s: Giant Sucking Sound or Small Hiccup?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2 Microec), pages 161-226.
    17. Danziger, Sheldon & Taussig, Michael K, 1979. "The Income Unit and the Anatomy of Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(4), pages 365-375, December.
    18. Marvin H. Kosters, 1991. "Workers and Their Wages: Changing Patterns in the United States," Books, American Enterprise Institute, number 52907, September.
    19. Mercenier, Jean, 1995. "Can "1992" reduce unemployment in Europe? On welfare and employment effects of Europe's move to a single market," Journal of Policy Modeling, Elsevier, vol. 17(1), pages 1-37, February.
    20. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G., 1992. "Piecemeal trade reform in partially liberalized economies : an evaluation for Turkey," Policy Research Working Paper Series 951, The World Bank.
    21. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    22. Corden, W.M., 1984. "The normative theory of international trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 2, pages 63-130, Elsevier.
    23. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    24. Robin Boadway, 1974. "A Note on the Welfare Foundations of Cost-Benefit Analysis," Working Paper 149, Economics Department, Queen's University.
    25. Cowell, Frank A, 1984. "The Structure of American Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(3), pages 351-375, September.
    26. Frank A. Cowell, 1984. "The Structure Of American Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(3), pages 351-375, September.
    27. Cowell, Frank A. & Kuga, Kiyoshi, 1981. "Additivity and the entropy concept: An axiomatic approach to inequality measurement," Journal of Economic Theory, Elsevier, vol. 25(1), pages 131-143, August.
    28. Paul Krugman & Robert Lawrence, 1993. "Trade, Jobs, and Wages," NBER Working Papers 4478, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. De Santis, Roberto A., 1998. "The impact of a Customs Union with the EU on internal migration in Turkey under the two alternative Harris-Todaro and wage curve settings," Kiel Working Papers 867, Kiel Institute for the World Economy (IfW Kiel).

    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. Ruiz-Castillo, Javier, 1994. "A complete model for welfare analysis," UC3M Working papers. Economics 2907, Universidad Carlos III de Madrid. Departamento de Economía.
    2. Ruiz-Castillo, Javier, 1994. "The evolution of the standard of living in Spain, 1973-74 to 1980-81," UC3M Working papers. Economics 2909, Universidad Carlos III de Madrid. Departamento de Economía.
    3. Weizsäcker, Robert K. von, 1995. "Does an Aging Population Increase Inequality?," Discussion Papers 535, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    4. Javier Ruiz-Castillo, 1995. "Income distribution and social welfare: a review essay," Investigaciones Economicas, Fundación SEPI, vol. 19(1), pages 3-34, January.
    5. Dumont, Michel, 2004. "The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union," Thesis Commons bmxag, Center for Open Science.
    6. James Foster & Joel Greer & Erik Thorbecke, 2010. "The Foster–Greer–Thorbecke (FGT) poverty measures: 25 years later," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(4), pages 491-524, December.
    7. Nahuis, R., 1997. "On Globalisation, Trade and Wages," Research Memorandum 747, Tilburg University, School of Economics and Management.
    8. James E. Foster & Joel Greer & Erik Thorbecke, 2010. "The Foster-Greer-Thorbecke (FGT) Poverty Measures: Twenty-Five Years Later," Working Papers 2010-14, The George Washington University, Institute for International Economic Policy.
    9. repec:eee:labchp:v:3:y:1999:i:pb:p:2215-2288 is not listed on IDEAS
    10. von Weizsacker, Robert K., 1996. "Distributive implications of an aging society," European Economic Review, Elsevier, vol. 40(3-5), pages 729-746, April.
    11. Papatheodorou, Christos, 2000. "Decomposing inequality in Greece: results and policy implications," LSE Research Online Documents on Economics 6568, London School of Economics and Political Science, LSE Library.
    12. Casilda Lasso de la Vega & Ana Urrutia & Oscar Volij, 2011. "An Axiomatic Characterization Of The Theil Inequality Order," Working Papers 1103, Ben-Gurion University of the Negev, Department of Economics.
    13. Sakurai, Kojiro, 2001. "Biased Technological Change and Japanese Manufacturing Employment," Journal of the Japanese and International Economies, Elsevier, vol. 15(3), pages 298-322, September.
    14. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
    15. John Creedy & Cath Sleeman, 2005. "Adult equivalence scales, inequality and poverty," New Zealand Economic Papers, Taylor & Francis Journals, vol. 39(1), pages 51-81.
    16. Satya Chakravarty, 2001. "The Variance as a subgroup decomposable measure of inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 53(1), pages 79-95, January.
    17. Chris Elbers & Peter Lanjouw & Johan Mistiaen & Berk Özler, 2008. "Reinterpreting between-group inequality," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(3), pages 231-245, September.
    18. Magdalou, Brice & Nock, Richard, 2011. "Income distributions and decomposable divergence measures," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2440-2454.
    19. Wang, Zhi, 1997. "The Impact of China and Taiwan Joining the World Trade Organization on U.S. and World Agricultural Trade: A Computable General Equilibrium Analysis," Technical Bulletins 184382, United States Department of Agriculture, Economic Research Service.
    20. Francisco J. Goerlich-Gisbert & Casilda Lasso de la Vega & Ana Marta Urrutia, 2009. "The ‘extended’ Atkinson family and changes in the expenditure distribution. Spain 1973/74-2003," Journal of Income Distribution, Ad libros publications inc., vol. 18(1), pages 20-41, March.
    21. Stéphane Mussard & Françoise Seyte & Michel Terraza, 2006. "La décomposition de l’indicateur de Gini en sous-groupes : une revue de la littérature," Cahiers de recherche 06-11, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.

    More about this item

    Keywords

    Customs Union; Income distribution; Employment; AGE analysis; Turkey;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

    Statistics

    Access and download statistics

    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:zbw:ifwkwp:843. 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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.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.