Economic Liberalisation, Internal Migration and Income Inequality:

A Case Study for Turkey

UTIP- UNIDO is a global data set of University of Texas Inequality project (UTIP) based upon the UNIDO industrial statistics. Theil measure is computed for measuring the industrial pay-inequality. The figure below shows the variation in Theil measure for Turkey and Mexico from 1975 to 2000.

UTIP- UNIDO is a global data set of University of Texas Inequality project (UTIP) based upon the UNIDO industrial statistics. Theil measure is computed for measuring the industrial pay-inequality. The figure below shows the variation in Theil measure for Turkey and Mexico from 1975 to 2000.

 

Income inequality in the labor-abundant industrializing countries has not decreased in the recent decades in contrast with the predictions of the Stolper-Samuelson theorem (World Bank Development Indicators). The Stolper- Samuelson theorem suggests that as countries start trading with each other, income inequality decreases in the industrializing countries as production moves towards unskilled-labor intensive products, increasing the demand for unskilled labor.  This paper seeks to illustrate that the supply-side determinants of labor markets, along with labor market policies have a significant impact on income inequality. Taking Turkey as a case study, this paper presents a qualitative analysis on sources of income inequality in the transition period to open-economy.

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