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# Equality in Income Distribution

Photographer: Tima Miroshnichenko

Recently, citizens of the Republic of Turkey said, “We can't make a living, everything is expensive in the market, our income doesn't really mean anything anymore, etc.”. Let's see if the welfare or income of the citizens is really decreasing, or is it just speculation?

First of all, two of the most important methods are used to measuring equality in income distribution in a region, country or in the world are the Lorenz Curve and the Gini Coefficient (Altınışık & Peker, 2008, p. 103). In Republic of Turkey, people measure the welfare or income with quality of their phones or the amount of cars on the road.

An example of the Lorenz Curve is given in Figure 1 below as an example. (Adapted from the 2016 article of Mahfi Eğilmez's blog titled "Kendime Yazılar".)

Figure 1: Lorenz Curve Example

In Figure 1, the amount of income is considered as a percentage on the axis from the bottom left to the top of the left side (y-axis). In other words, the percentage parts of all produced income by the society are included. In the figure, from the bottom left to the bottom right (x-axis), the percentages of the whole society are taken into account. In other words, it is an expression that shows the percentage of the group with the highest income from the percentage of the group with the least income.

In the figure, the income curve of the population is shown as the Lorenz Curve, and the lowest income 20% of the population gains 5% of the total income, while the lowest income 40% gain 10% of the total income, and the lowest income 60% gain 25% of the total income. The least income earning 80% of the total population receives 43% of the total income. In other words, 20% (100%-80%) of the society on the far right (last) with the highest income receives 57% (100%-43%) of the total generated income. This graphically shows how fair the income is.

If all people equally divided the income produced, the first 20% of the population would gain 20% of the total income, the second 20% would gain the next 20% income, and each subsequent 20% would continue to gain 20% of the income. We can see this in the line of absolute equality in Figure 1.

Income distribution research within the Republic of Turkey is conducted by TUIK under the name of "Income and Living Conditions". While this research is being conducted, TUIK explains the Gini coefficient according to the results by surveys (Eğilmez, 2016).

In Table 1 below, the shares of income groups from the total income between the years 2012-2021 in the Republic of Turkey are given. It should not be forgotten that while the results of the surveys are announced in the new year, people fill these surveys according to the last year. For this reason, the income reference year is shown as the previous year.

In Table 1 below, the shares of income groups from the total income between the years 2012-2021 in the Republic of Turkey are given. It should not be forgotten that while the results of the surveys are announced in the new year, people fill these surveys according to the last year. For this reason, the income reference year is shown as the previous year.

If we look at the results of 2021 in Table 1, while the first 20% of the society with the highest share of income from the total income is 6.1%, the other 20% of the population are respectively 10.8%, 15.1%, 21,3% and 46,7% of the total income. When we look at the last 20% of the population, we can see that they gain 46.7% of the total income. If we divide the share of the group with the highest income (46.7%) by the share of the group with the lowest income (6.1%), the result is 7.6. In other words, the people with the highest income earn exactly 7.6 times more income than the people with the lowest income.

An example of the Gini coefficient can be easily seen in Figure 1. It is calculated by dividing the group between the and the Lorenz Curve (region A) by the entire section on the right side of the absolute equality line (the sum of regions A+B). We can see this from Formula 1 below (Eğilmez, 2016).

Equation 1

In Table 2 below, Gini Coefficient of Republic of Turkey between years 2012-2021 are given.

In Table 2, the ratio of the income of the 20% of the group that gains the largest share of the total income to the income of the 20% of the group that gains the least share of the total income is shown with the “P80/P20” ratio, while the ratio of the income of the 10% that gains the largest share of the total income to the income gains the 10% that gains the least share of the total income is shown with the “P90/P10” ratio. Here is what can be understood. The richest 10% of the society earns 13.7 times more income than the poorest 10% of the society.

In the future, I plan to write an article about the amount of cars on the roads and phone quality scales. Let's see what happens.

References:

- Altınışık, İ., & Peker, H. S. (2008). Eğitim ve gelir dağılımı eşitsizliği. KMU ĠĠBF Dergisi(15), 101-118.

- Eğilmez, M. (2016, 9 21). Kendime Yazılar. 6 22, 2022 tarihinde www.mahfiegilmez.com: https://www.mahfiegilmez.com/2016/09/gelir-daglmnda-son-durum.html adresinden alındı

- TÜİK. (2022, 5 6). Gelir ve yaşam koşulları araştırması, 2021. 6 23, 2022 tarihinde www.tuik.gov.tr: https://data.tuik.gov.tr/Bulten/Index?p=Gelir-ve-Yasam-Kosullari-Arastirmasi-2021-45581 adresinden alındı

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