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World Bank Document Public Disclosure Authorized State Planning Organization of the Republic of Turkey and World Bank Welfare and Social Policy Analytical Work Program Working Paper Number 1: Public Disclosure Authorized Poverty and Inequality Changes in Turkey (2003-2006) Public Disclosure Authorized Meltem Aran Oxford University & The World Bank Sırma Demir State Planning Organization, Republic of Turkey Özlem Sarıca Turkish Statistical Institute Public Disclosure Authorized Hakan Yazıcı State Planning Organization, Republic of Turkey Ankara, March 2010 State Planning Organization of the Republic of Turkey and World Bank Welfare and Social Policy Analytical Work Program Working Paper Number 1: Poverty and Inequality Changes in Turkey (2003-2006) Meltem Aran Oxford University & The World Bank Sýrma Demir State Planning Organization, Republic of Turkey Özlem Sarýca Turkish Statistical Institute Hakan Yazýcý State Planning Organization, Republic of Turkey Ankara, March 2010 State Planning Organization World Bank Copyright @ 2010 The International Bank for Reconstruction and Development The World Bank 1818 H Street, NW Washington, DC 20433, USA All rights reserved The World Bank enjoys copyright under protocol 2 of the Universal Copyright Convention. This material may nonetheless be copied for research, educational or scholarly purposes only in the member countries of The World Bank. Material in this report is subject to revision. Poverty and Inequality Changes in Turkey (2003-2006) iii Poverty and Inequality Changes in Turkey (2003-2006) Table of Contents Abstract ................................................................................................................................................................... v 1. Introduction ......................................................................................................................................................... 1 2. Literature Review ................................................................................................................................................ 1 3. Data and Methodology ........................................................................................................................................ 2 3.1 Data............................................................................................................................................................... 2 3.2 Methodology................................................................................................................................................. 2 (i) Construction of the consumption (or welfare) aggregate ........................................................................ 2 (ii) Construction of the food and non-food poverty lines.............................................................................. 3 4. Analysis of Changes in Poverty and Inequality in Turkey .................................................................................. 4 4.1 Findings on Overall Changes in Poverty (2003-2006) ................................................................................. 4 4.2 Stochastic Dominance Tests ......................................................................................................................... 6 4.3 Changes in Inequality Measures (2003-2006) .............................................................................................. 8 5. Poverty Profiles and Relative Risk of Poverty Over Time..................................................................................10 5.1 Poverty by Status and Sector of Employment ..............................................................................................10 5.2 Poverty by Educational Attainment ..............................................................................................................11 5.3 Poverty by Age Groups................................................................................................................................. 11 5.4 Poverty by Household Composition and Gender of Household Head..........................................................11 5.5 Changes in the Relative Risk of Poverty in Turkey......................................................................................12 6. Correlates of Poverty: A Multivariate Analysis............................................................................... ....................15 6.1 Household Composition Variables................................................................................................................15 6.2 Educational Attainment ................................................................................................................................ 17 6.3 Sector of Employment for Household Head.................................................................................................17 7. Conclusions ......................................................................................................................................................... 17 Annex-Tables........................................................................................................................................................... 19 References ............................................................................................................................................................... 26 Figures Figure 1: Growth Incidence Curves ........................................................................................................................ 5 Figure 2: Probability Density Functions for Consumption in Turkey (2003-2006) ................................................ 7 Figure 3: First Order Stochastic Dominance Test: Poverty Incidence Curves ........................................................ 7 Figure 4: The Gini Coefficient and Lorenz Curves for Turkey (2003-2006) .......................................................... 9 Figure 5: Poverty by Age Groups and Gender (2006).............................................................................................12 Poverty and Inequality Changes in Turkey (2003-2006) v Abstract Poverty in Turkey has declined significantly between 2003 and 2006, as a result of rapid poverty reduction in urban areas. In the same time period, the reduction in poverty in rural areas has been slow or non-existent. As a result, the relative risk of poverty has increased in this time period for those employed in the agricultural sector, living in rural areas and in large households. Inequality in urban areas has decreased as a result of higher growth in the consumption levels of the urban poor compared to richer deciles, while no significant changes to inequality measures have been noted in rural areas. In fact, the consumption levels of the poorest groups in rural Turkey have declined between 2003 and 2006. Child poverty has also been persistent in this time period, with the relative risk of poverty for children (ages 0-19) increasing over time. This paper constitutes part of a collaborative analytical work program between the World Bank and the State Planning Organization. The findings of this paper have been previously presented at the Welfare and Social Policy Conference organized by these institutions in Ankara on October 22, 2008. The findings and statements in this research paper are the responsibility of the authors and do not reflect the official views of their respective institutions. The authors would like to thank Jesko Hentschel, Francisco Ferreira, Erwin H. R. Tiongson and Edmundo Murrugarra for their valuable comments during the conference and in the process of writing this paper. Poverty and Inequality Changes in Turkey (2003-2006) 1 1. Introduction tion and income measures (Dumanli (1996), Erdogan (1996), Dumanli and Bulutay (2000), Alici (2000), 1. This paper illustrates the changes in poverty and Oguzlar (2006)) while some studies follow a human consumption inequality in Turkey in recent years. The development approach focusing on the social settings official calculations for poverty in Turkey indicate that and natural endowments (See Akder (1999 and 2000)). there has been a significant decline in poverty levels Studies dating before 2000 have mainly used income from 23% in 2003 to 17% in 2006 (using the complete aggregates whereas after 2000, consumption expenditure poverty lines for food and non-food spending). By is heavily employed as a welfare indicator in poverty looking at changes in inequality and consumption measurement. patterns, the paper also aims to analyze who has benefited most from the recent rapid changes in poverty reduction 4. In the 2000s, following the 2001 economic crises, in Turkey. In many ways, this diagnostic paper updates recent academic work has focused on the changing the results of the Turkey Joint Poverty Assessment forms of poverty in Turkey (Buðra and Keyder, 2003, report which was carried out using data from 2001, in 2005; Keyder and Ustundag, 2006). Besides, some terms of the profiles of the poor and also provides more studies have touched on the determinants of poverty both at rural and urban levels (Atahan 2006, Pamuk detailed analysis on relative changes in welfare. 2002). For instance, Buðra and Keyder (2003 and 2006) focus on the changing nature of immigration and how 2. The paper is laid out as follows: A brief literature the new immigrants in urban areas are unable to link review is provided in Section 2. The data sources and up with social networks as the ones that came before methodology for constructing
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