Time-varying causality between income inequality and ecological footprint in Turkey

Abstract

This paper investigates the relationship between income inequality and environmental degradation for the case of Turkey between 1987 and 2017 through the bootstrap causality method that changes over time. The study used the GINI coefficient to denote income inequality and ecological footprint (EFP) to represent environmental degradation. According to the analysis results, a causal relationship has been determined for Turkey from GINI to EFP between 2002 and 2015 and from EFP to GINI between 2002 and 2008. Thanks to the method used in the analysis, it was concluded that GINI-affected EFP positively between 2002 and 2005 and negatively between 2006 and 2015. Between 2002 and 2005, Turkey endured a difficult period of restructuring after two major banking crises in 1999 and 2001. The rapid development, especially in industry and urbanization, caused environmental degradation in this period. Between 2006 and 2015, the central dynamic of Turkey's growth trend was the finance sector, and rapid privatizations were realized. Nevertheless, the income justice improvement in this period negatively impacted the environment due to consumption and production habits. Policymakers should evaluate Turkey in its economic reality and produce policies accordingly. Environmental awareness should be increased in the production and consumption activities of all segments of society, benefiting from the developments in income distribution. The ecological impact of the income redistribution policy, along with its market and social consequences, needs to be evaluated.