Declining Poverty and Inequality in Turkey: The Effect of Social Assistance and Home Ownership

Abstract

Social assistance has become prominent in combating poverty in developing countries, and has also contributed to the popularity and election success of governments implementing it. In this paper, I employ household surveys and investigate the effect of social assistance on poverty and income inequality in Turkey. I also review the recent literature on poverty, as well as different components of social protection spending: education, health, pensions and housing. In the empirical analysis, I show that pensions still constitute the bulk of public transfers to households. Moreover, home ownership ameliorates poverty and inequality for Turkey. Despite its modest amounts, social assistance reduces poverty and its marginal effect on income inequality is larger than other income sources. These findings suggest that increases in social assistance budgets should accompany other policy measures in combating poverty and inequality.