DOES INSTITUTIONAL QUALITY MATTER IN ACHIEVING INCOME INEQUALITY? PANEL CAUSALITY ANALYSIS FOR G-8 COUNTRIES

Authors : Hüseyin Çelik

Pages : 559-573

Doi:10.54831/vanyyuiibfd.1811163

View : 70 | Download : 167

Publication Date : 2025-12-27

Article Type : Research Paper

Abstract :The level of GDP produced by countries varies due to differences in micro- and macroeconomic indicators. Beyond GDP magnitude, equitable income distribution is crucial. This study examines the impact of institutional quality on income distribution. Income inequality is measured using the GINI coefficient, while governance effectiveness, political stability, control of corruption, and rule of law as institutional quality indicators. Annual data from 2002–2023 are analyzed using the panel causality test by Emirmahmutoğlu & Köse (2011). Results for overall panel indicate unidirectional causality from governance effectiveness, political stability, and control of corruption to income distribution, and from income distribution to control of corruption. These findings suggest that institutional quality significantly shapes income distribution. Moreover, improvements in income distribution appear to reinforce anti-corruption efforts. The study highlights the critical role of institutions in promoting both social equity and economic governance, emphasizing that policies and institutional effectiveness are interlinked in reducing inequality.
Keywords : Kurumsal Kalite, Gelir Dağılımı, GINI, Panel Veri

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