The Importance of Inclusive Income Distribution for Sustainable Growth in Türkiye: A Time Series Analysis

Abstract

This study econometrically examines the impact of income distribution on economic growth in Turkey for the 2005–2024 period, utilizing national-level time-series data. The role of income distribution (measured by the Gini coefficient) on sustainable growth holds critical importance for policymakers. The long-term econometric analysis conducted via the Autoregressive Distributed Lag (ARDL) Model demonstrates that an increase in income inequality affects the economic growth rate in a statistically significant and negative manner. Applying the analysis through time-series methods provides a methodological advantage in examining the long-term and short-term dynamics between macroeconomic variables. The positive effects of investments and the negative effects of the inflation rate, treated as control variables, confirm the importance of price stability and capital accumulation in alignment with theoretical literature. This finding supports modern theoretical approaches suggesting that income inequality slows growth by restricting human capital investments and narrowing internal demand. The results indicate that rather than focusing solely on GDP growth, Turkey should adopt inclusive and fair income distribution policies as a fundamental macroeconomic goal. Specifically, macroeconomic reforms focused on education, health, and employment aimed at reducing income inequality are recommended.