Social Transfers and Income Inequality in Turkey: How Informative Is the Survey of Income and Living Conditions?

Abstract

The main purpose of this paper is to draw attention to the difficulties in determining the extent to which social transfers have an impact on income inequality in Turkey. Given the socio-economic and political importance of the issue, an examination of the redistributive impact of pensions and socialassistance programs in Turkey could indeed be an enlightening exercise. Unfortunately, some data inadequacies limit our ability to provide a reliable answer to the research question. The currently available micro data set drawn from the Survey of Income and Living Conditions (SILC) identifies the amounts of various types of income received by individuals or—in some cases—households, and we find that social assistance and disability benefits do alleviate income inequality. However, the actual redistributive effect of what is generally agreed upon as “social assistance” in the Turkish context is probably quite larger than our findings suggest. The reason is that certain types of social benefits are lumped together in the SILC with other income types, while others—including health-insurance premiums paid by the state on behalf of poor households—are not recorded at all. The redistributive impact of pension payments and unemployment benefits does not appear to be very large, since especially the latter are received mainly by individuals who are outside the lower end of the income distribution.The main purpose of this paper is to draw attention to the difficulties in determining the extent to which social transfers have an impact on income inequality in Turkey. Given the socio-economic and political importance of the issue, an examination of the redistributive impact of pensions and socialassistance programs in Turkey could indeed be an enlightening exercise. Unfortunately, some data inadequacies limit our ability to provide a reliable answer to the research question. The currently available micro data set drawn from the Survey of Income and Living Conditions (SILC) identifies the amounts of various types of income received by individuals or—in some cases—households, and we find that social assistance and disability benefits do alleviate income inequality. However, the actual redistributive effect of what is generally agreed upon as “social assistance” in the Turkish context is probably quite larger than our findings suggest. The reason is that certain types of social benefits are lumped together in the SILC with other income types, while others—including health-insurance premiums paid by the state on behalf of poor households—are not recorded at all. The redistributive impact of pension payments and unemployment benefits does not appear to be very large, since especially the latter are received mainly by individuals who are outside the lower end of the income distribution.