Regional income inequality and trade openness in Türkiye: A spatial econometric analysis

This study examines the relationship between regional inequality and trade openness in Türkiye’s 26 NUTS-II regions from 2014 to 2022, employing spatial panel data models. Using the GINI coefficient as a measure of inequality, the analysis explores the influence of trade openness, labor force participation, population density, and average years of schooling per capita. Results indicate that trade openness has a significant negative impact on inequality, highlighting its role in reducing regional disparities through enhanced market access and economic opportunities. However, the labor force participation rate exhibits a marginally positive relationship with inequality, potentially reflecting disparities in job quality and access to skilled employment. Population density emerges as a key driver of inequality, with densely populated regions experiencing greater income disparities due to urbanization and economic concentration effects. Surprisingly, the average years of education do not significantly influence inequality, which may result from unequal access to quality education or its limited translation into equitable economic opportunities. The study also identifies significant spatial dependencies, with regional inequality influenced by conditions in neighboring regions. These findings emphasize the need for tailored policies addressing both local and interregional dynamics to reduce inequality effectively.