Essays in Income Inequality and Regional Composition

Tez Türü: Doktora

Tezin Yürütüldüğü Kurum: İstanbul Üniversitesi, İktisat Fakültesi, İngilizce İktisat Bölümü, Türkiye

Tez Danışmanı: Gökhan Övenç

Tezin Onay Tarihi: 2026

Tezin Dili: İngilizce

Özet:

Income distribution is becoming increasingly important as an economic factor for economic growth and stability at both the national and international levels. As income inequality increases, it undermines economic stability and gives rise to economic difficulties that jeopardize social welfare. This thesis covers analyses of income distribution at the regional level in Türkiye. In the two chapters following the introduction, the impact of income distribution on housing prices and stock market participation is examined sequentially. In the third chapter, the impact of the sectoral structure on income distribution is analyzed.

The first chapter examines the influence of income groups, stock market investments, and various macroeconomic factors on housing prices in different regions of Türkiye from 2015 to 2024, utilizing data from Nomenclature of Territorial Units for Statistics 2 (NUTS 2) regions. To precisely capture region-specific dynamics, the region-based system generalized method of moments estimator (GMM) is employed. But for panel data for encompassing the entire region, the system GMM estimator is utilized. The results indicate the varying effects of low and high-income households on housing prices. The research underscores the necessity of formulating housing and economic policies that address regional economic disparities, highlighting the substantial relationship among housing affordability, mortgage interest rates, stock investment levels, and housing prices considering the marked distribution of wealth inequality. It has also implications for micro and regional policy within the framework of an emerging economy. Furthermore, it seeks to go one step beyond current literature by offering empirical insights into regional mechanisms and studies concerning income distribution and asset price dynamics in emerging markets.

In the second chapter, the relationship between stock market participation and different income groups is investigated using annual data from 2015 to 2024 for seven regions at the NUTS 2 level in Türkiye, both regionally and nationally. Firstly, the analysis employs a dynamic panel structure to examine the regional focus, which is categorized as nationwide, major regions, and other regions (relatively small regions). Secondly, an innovative dynamic threshold effect method utilizing the Gini coefficient as the threshold value improves the regional approach. The results of the research indicate that regional heterogeneity substantially influences stock market participation in small and major regions. Concurrently, high-income and middle-income groups exhibit divergent investment preferences at the regional level. The use of the Gini coefficient as a threshold value under two different regimes (GC ≤ median of GC and GC > median of GC) effectively captures the non-linear relationship between stock market participation and income distribution. In terms of regression relationships, major and other regions have diverged substantially under a regime of high inequality. This two-stage analysis reveals the non-linear dimensions of how income distribution affects motivation to participate in the market and the impact of regional heterogeneity.

In the third and last chapter, the study employs a panel quantile methodology to analyze the varying impacts of inter-sectoral economic structures, capital markets, and innovation efforts on income distribution at the NUTS 2 level in Türkiye. In addition to a nationwide analysis, NUTS 2 regions are categorized into agriculture, industry, and services based on the prevalent labor force structures. This model, estimated by using four distinct regional methodologies, facilitates the analyses of regional and structural variability. The expansion of the industrial sector demonstrates a positive correlation solely with the highest two income quantiles nationwide; in agriculturally dominant regions, this correlation is statistically insignificant; conversely, in industrially dominant regions, it correlates positively with all income groups, whereas in service-intensive regions, it displays a negative correlation with all income groups. In service-intensive regions, the model is shown to be firmly consistent with growth theories, as illustrated by the inverse relationship between industrial growth and income. This indicates a deviation from the traditional progression from agriculture to industry and then to the service sector. In other words, in service-intensive regions, growth in the industrial sector implies a contraction in the higher income generating service sector.

Türkiye’s business ecosystem has for centuries been concentrated in İstanbul and the surrounding area, generating almost half of the GDP of the country. This ecosystem has become unstable in terms of both economic efficiency and socio-economic sustainability. The region's geographical limitations in enhancing production factors have become a significant structural constraint. A significant level of concentration may exacerbate social concerns and precipitate economic turmoil. In Chapter 3, the creation of new business centres, which I have defined as the Izmir and Mersin corridors, offering an alternative to Istanbul and its surrounding area—is presented as a solution to the concerns mentioned.

As income inequality is a social indicator, it is not merely an economic outcome. It directly affects issues such as education, health and demographics, and therefore requires a multidisciplinary approach that fall within the direct scope of economics, sociology, psychology, medicine and similar fields. As the issue of income distribution affects every section of society in different ways, addressing it with sensitivity will make a significant contribution to resolution of the problems arising in this field.