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

Adem Elveren (), Ibrahim Örnek and Günay Akel

International Review of Applied Economics, 2012, vol. 26, issue 5, 579-595

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.

Date: 2012
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DOI: 10.1080/02692171.2011.624499

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