The Impact of Globalization and Financial Development on Income Inequalities: New Evidence from Emerging Economies(Küreselleşme ve Finansal Gelişmenin Gelir Eşitsizliği Üzerindeki Etkisi: Yükselen Piyasa Ekonomilerinden Yeni Kanıtlar)

Abstract

The aim of the study is to empirically examine the combined effects of globalization and financial development on income inequality in a unified framework for an emerging economy. Panel data analysis method was used to examine the effect of globalization and financial development on income inequality. First, the existence of correlation between units was examined via the Breusch Pegan (2008) LM test and the Pesaran, Ullah and Yamagata (2008) NLM test. The stationarities of the variables were examined with the CADF (Crosssectional Augmented Dickey Fuller) Panel Unit Root test. Then, homogeneity test was applied via Swamy (S) test. The long-term relationship between the variables was analyzed via the Gengenbach, Urbain and Westerlund Panel Cointegration test.The causality between the variables was analyzed by the Dumitrescu-Hurlin causality test and the coefficients were analyzed by panel regression analysis. As a result of the panel cointegration test, no long-term relationship was detected between the variables. In a short-term relationship; It was concluded that there is a bidirectional causality relationship from financial development and inflation to income inequality, and a one-way causality relationship from globalization to income inequality. According to the results of the panel regression analysis, it was concluded that the effect of globalization and financial development on income inequality was statistically significant and negative, while inflation was statistically significant and positively effective.Globalization, Financial Development, Income Inequality, Emerging Market Economy, Panel Data Analysis.

Keywords

• globalization
• financial development
• income inequality
• emerging market economy
• panel data analysis.