Income Traps for Different Income Groups: An Empirical Investigation

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Altayligil Y. B., Akkay R. C.

EfilJournal, vol.5, no.3, pp.29-51, 2022 (Peer-Reviewed Journal)

  • Publication Type: Article / Article
  • Volume: 5 Issue: 3
  • Publication Date: 2022
  • Journal Name: EfilJournal
  • Journal Indexes: EBSCO Education Source, EBSCO Legal Collection, EBSCO Legal Source
  • Page Numbers: pp.29-51
  • Istanbul University Affiliated: Yes

Abstract

This study investigates the existence of income traps for 42 countries with different income levels. These income traps were investigated by employing the Augmented Dickey-Fuller, Zivot-Andrews with one break, and Lee-Strazicich with two breaks test procedures for the 1987-2019 period. The empirical findings reveal the existence of income traps at lower-middle, upper-middle, and lower-high-income levels. The study points out the possibility of a new income trap for countries that have just passed the income threshold that separates upper-middle and high-income countries.