How Urbanization Affects the Inequality in Developing ...



How Urbanization Affects the Inequality in Developing Countries: A Critique of Kuznets Curve

Cem Oyvat

According to the Kuznets’s U-curve theory, urbanization increases inequality in developing countries during the first phase of industrialization. This argument is based on two assumptions. Firstly, the increase in productivity is greater for the industrial population; secondly, inequality in urban areas is greater than or equal to inequality for rural areas. However, the Kuznetsian argument could be false for many cases including the Turkish case, in which rural inequality was relatively higher due to the social structure of the country. Therefore, in many developing countries the relation between inequality and income may be negative or be only slightly positive for the first phase of industrialization.

This paper aims to prove that: (1) The argument suggested by Kuznets may not explain real changes in income distribution for many cases including Turkey (2) The long-run fall in Gini coefficient in Turkey may be highly related to the migration process within the country.

Introduction

In developing countries, the growth process not only alters the level of output or technology, but also changes the economic relations and the social structure. The development process involves significant changes in the levels of income of individuals; however, a part of the society usually benefits relatively more from the rising incomes. Therefore, in many cases the development process changes the income distribution; the income of a specific part of the society increases relatively more compared to the rest of the society.

The first stage of the development process is usually associated with industrialization. As a country industrializes; individuals in urban areas benefit from rising productivities and the gap between per capita incomes of urban and rural areas increases. The growing benefits in the urban areas also alter the structure within the society. Many individuals in rural areas decide to migrate to urban areas to take advantage of the industrialization and rising urban incomes.

A part of the migration stream may be formed by lower-income individuals that are mostly unskilled and illiterate. These individuals mostly have individual concerns and they mostly move to the informal urban sector for earning wages. The higher income individuals also migrate for exploiting the advantages of urban society; however, these individuals concern more about their family requirements and aim to generate income, education or remittances that could be useful for the whole family (Lipton, 1982). In any case, urbanization preceded by industrialization changes economic structure and gains in the society. As the urbanization process alters the incomes of individuals, it will create significant changes in the income distribution both in the short and the long run.

The impact of migration on inequality is explored by Kuznets (1955) in his AER article “Economic Growth and Income Inequality”, which forms a basis for Kuznets’s inverted U-curve theory. In his article, Kuznets shows how demographic changes followed by industrialization alter income distribution within a country. We should notice that in his theory, Kuznets is only concerned about the one way relation from development to inequality, he never mentions anything on the impact of inequality on growth. In fact, Kuznets (1963) says that: “All we can say is that the unequal distribution of income in the earlier decades in the presently developed countries did not prevent economic growth. But…we cannot say that a somewhat or less (or more) unequal size distribution might not have contributed to even faster growth.”. Therefore, our focus on this study will be on how development and urbanization affect the income distribution.

The development process can change the overall inequality by affecting three factors. Firstly, as the urban share increases, the urban inequality starts to make a greater contribution to overall inequality. Secondly, the industrialization could widen the urban-rural gap; however, the impact of industrialization would be offset by factors like technological spillovers, changes in the terms of trade and rising land per capita. Thirdly, the development could change both within rural and urban inequalities.

In Kuznetsian framework, development may bring unequal gains and the first phases of industrialization are associated with higher inequality. However, in some cases the urbanization followed after the early stage of industrialization may have instant positive effects on inequality. This instant positive effect may even offset the unequalizing effect of the early industrialization. Thus, the start of industrialization does not guarantee a rise in inequality.

Development, urbanization and the change of inequality in Kuznetsian framework

The Kuznetsian approach is considered as one of the most important approaches for explaining, how development affects inequality. According to Kuznets (1955), urbanization followed by industrialization is an important factor in the shift of inequality. Kuznets says “an invariable accomplishment of growth in developing countries is the shift away from agriculture, a process usually referred to as industrialization and urbanization”. Thus, Kuznets sees industrialization and urbanization as processes that are mutually developing at the same time. Kuznets claims that urbanization increases inequality in the first stages of industrialization and he makes two crucial assumptions for strengthening his claim:

“a) the average per capita income of the rural population is usually lower than that of the urban; b) inequality in the percentage shares within the distribution for the rural population is somewhat narrower than in that for the urban population –even based on annual income; and this difference would probably be wider for distributions by secular income levels.”

With the given assumptions Kuznets claims that increasing the urban population means increasing the share of the more unequal component of the income distribution. Therefore, according to Kuznets urbanization pursued by the migration process inherently raises inequality during the first stages of industrialization. Secondly, the emergence of industrialization raises the per capita income gap between the urban and rural population, until the benefits of industrialization are also shared by the rural population. Thus, “the relative difference in per capita income…is stable at best, and tends to widen because per capita productivity in urban pursuits increases more rapidly than in agriculture”.

The Kuznetsian framework relies on the Lewis (1954) model that was outlined in Lewis’s classic article “Economic Development with Unlimited Supplies of Labor”. Lewis claims that development is driven by rising profits and accumulation in the capitalist sector. The saving rates for the capitalist class are relatively higher compared to the working class, since the working class could only save for its essential expenditures like housing, education etc. Therefore, according to Lewis, the amount of savings grows as the relative income of the capitalists rises. In his model, savings are realized as the major source of capitalist accumulation, so Lewis concludes that “the central fact of economic development is that the distribution of incomes is altered in favor of the saving class”.

The capitalist group accumulating in Lewis’s context is mainly the capitalist industrial class. Lewis argues that merchants use their profits mainly for speculation and peasants would prefer to spend his profits for enlarging his land, not his capital. Only the class of industrialists reinvests its profit productively; only the industrialists have incentives “towards using profits to create a bigger empire of bricks and steel”.

Lewis argues that the subsistence sector, which is mostly associated with the agricultural sector, cannot stimulate development, since the subsistence sector cannot produce reproducible capital. During the development process, the incomes of capitalist industrialists will increase, whereas incomes in the subsistence agricultural sector stay relatively stagnant, unless the subsistence sectors start benefiting from the development of the capitalist sector. Eventually, the emergence of development in the Lewis model is associated with higher urban inequality and a rising income gap between urban and rural areas. The development of the capitalist sector will be supported with the labor supplied by the subsistence agriculture sector, which will lead to urbanization as it is claimed by Kuznets. As a result, the urban population grows and higher inequality will be expected at least in the first stage of Lewisian development.

Lewis says the subsistence sector could be more productive, if the peasants start to imitate capitalist techniques by using new seeds and fertilizers or if they start to benefit from capitalist investments in irrigation, in transport facilities or in electricity. However, in his statement Lewis does not say whether increase in productivity in the subsistence sector will be bigger or less than the increase in productivity in the capitalist sector. Thus, he does not imply anything about the changing income gap between the urban and rural sectors. He only argues that higher productivity of the subsistence sector will lead to higher real wages in the capitalist sector and reduce the capitalist surplus and accumulation. Hence, Lewis focuses on the relationship between the development of subsistence sector and the income distribution within the capitalist sector.

The Kuznets process is depicted in some studies by using modeling. The model proposed by Robinson (1976) claims that the Kuznets process holds even if the rural inequality is greater than the urban inequality. However, he assumes that both within rural and urban inequalities and rural-urban income gap are constant, while developing his model. Robinson’s assumption is not applicable for many cases; the changes that may occur in inter- and intrasectoral inequalities could falsify Robinson’s model.

Another model that explains the Kuznets process is developed by Anand and Kanbur (1993). Consistent with the Kuznetsian approach, Anand and Kanbur assume that population moves to the urban sector, where inequality is larger. The model decomposes the inequality into within-sector and between-sector component. Anand and Kanbur first assume that means and the within-group inequalities of the urban and rural sectors are constant and the change in inequality is occurring only due to population shifts. They show that the within-sector component should be increased due to the greater population in the more unequal urban sector and therefore the between-sector inequality should be reduced for the U curve to be formed under their assumptions. However, empirically they show that their assumptions do not hold and the model should allow the sectoral means and sectoral inequalities to shift over time. The model concludes that inequality changes not only due to the population shifts, but also due to the changes in sectoral means and within sectoral inequalities. This result is consistent with the Kuznetsian approach that explains the mechanisms that reduces urban inequality. Hence, explaining the changes in inequality merely by urbanization is not enough; the results of urbanization on both sectoral mean incomes and inequalities should also be explored.

Urban-Rural Income Gaps

The urbanization changes the overall inequality in a country by raising the impact of urban inequality on the overall distribution. However, the industrialization and urbanization processes can affect the overall inequality not only by shifting the sectoral shares, but also by changing the intra and intersectoral inequalities. As a country develops, the intersectoral inequality between the urban and rural sectors changes due to first and secondary effects of industrialization.

According to Kuznets (1955), the early effects of industrialization could raise the income gap between the urban and rural sectors. In his AER article, Kuznets (1955) claims that:

“The relative difference in per capita income between the rural and urban populations does not necessarily drift downward in the process of economic growth: indeed, there is some evidence to suggest that it is stable at best, and tends to widen because per capita productivity in urban pursuits increases more rapidly than in agriculture.”

The intuition behind this argument could come from the Lewis model (1954). In Lewis model, the development is mainly driven by the industrial sector. However, Lewis also examines the secondary effects of development on the subsistence sector (mainly agriculture). Firstly, Lewis mentions that the subsistence sector could also increase its productivity by imitating the techniques in the capitalist sector. For example, peasants could get new seeds or they could use fertilizers for raising their productivities. He also says that the subsistence sector could benefit from the capitalist investments like irrigation works, transport, and electricity.

Lewis secondly claims that if the capitalist and subsistence sectors specialize in different products (like agriculture and industry), the urbanization could lead to greater demand and relative shortage of agricultural commodities. As a result, the agricultural output will not be enough to feed the industrial workers. The terms of trade will worsen for the industrial sector, which would partially close the urban-rural income gap. Lewis also mentions that the terms of trade effect might not be seen, if the capitalist sector invests on agriculture or the productivity in the subsistence sector increases significantly.

Ranis and Fei’s (1961) arguments in their article “The Theory of Economic Development” could be considered as a complement to Lewis model. In their study, Ranis and Fei claim that “Lewis…has failed to present a satisfactory analysis of the subsistence or agricultural sector.” Thus, they propose a more detailed analysis for examining the secondary effects of industrialization and urbanization on agriculture.

In their model, Ranis and Fei (1961) claim that the economy could follow a balanced growth, in which time to time deviations are seen. As in the Lewis model, in the case of overinvestment in the industrial sector, the shortage of food could lead to deterioration of the terms of trade in the industrial sector and industrial wages will rise due to growing food prices. As a result of this, the industrial investments will be discouraged; hence, there will be more incentives to invest on agriculture. Thus, the actual growth path could return to the balanced growth path and the urban-rural income gaps could narrow down.

The urbanization could also increase the income in rural areas through the remittances. The urban settlers can transfer money to their relatives, which could generate an extra income for the rural dwellers (Lall, Selod and Shalizi, 2006). Remittances also create an extra economic activity in the rural sector, when the new urban settlers spent their income for investments like housing in their origins (HDR, 2009). Many studies show that remittances increase the level of education and improve health of origin families (Becker, 2007). Improved human capital could also contribute to rural productivity positively.

There are also studies that show how urbanization can change the inequality by altering the land per capita. In fact, many studies (Sen, 1996; Griffin, Khan and Ickowitz, 2002) claim that the land productivity might be lower in small scale farms since family farms have advantages in monitoring and effort. However, the migration of rural individuals could still increase the rural income per capita (Bourguignon and Morrisson, 1998), although it might not lead to higher land productivity, as in the case of shift from small to large scale farming. In addition, urbanization might not lead to a transformation from small to large scale farming. The family farming structure could continue, only the family members that cultivate the land could be reduced due to the migration. In this case, it is more probable that the rural income per capita will increase with urbanization.

Stiglitz (1982) also focuses on increases in agricultural productivity; however, he makes an alternative interpretation by using his efficiency wage model. According to Stiglitz, the migration of a family member changes the marginal product of the other members that stay in the rural sector. If output is proportional to effort, equal share of output between many family members could reduce output by lowering incentives for supplying effort. This might cause a loss of efficiency in agricultural production. In such cases, the migration of an individual within the rural family could increase the efficiency by bringing better incentives to the peasants for supplying more effort. Therefore, migration process could close the urban-rural income gaps by not only increasing average rural incomes, but also by raising total productivity in the planted areas.

Within Inequality

In his article, Kuznets (1955) also claims that the inequality will decrease in the later stages of development. However, unlike the studies mentioned above (Ranis and Fei , 1961; Bourguignon and Morrisson, 1998; Stiglitz, 1982), Kuznets focuses on the changes in urban inequality rather than the narrowing intersectoral income gap. He uses the long term effects of urbanization for making his analysis and perceives urbanization as a process that would reduce inequality in the long run.

According to Kuznets, raising inequality will be narrowed, mostly due to the declining inequality within the urban groups. Kuznets claims that, within years the economic positions of new urban dwellers and their descendants improve. The social mobility equalizes economic differences, and hence inequality follows a declining path. The mechanism behind the social mobility is explained by Kuznets. Firstly, as the development process continues a larger share of the urban population becomes “native” urban dweller. Thus, a larger proportion of population benefits from the advantages of the city life. Secondly, in democratic societies the growing political power of the lower-income groups resulted in changing legislation and new policies that counteracts against the negative consequences of rapid industrialization and urbanization.

Thirdly, the forces of “freedom of individual opportunity” enable development of new fields that bring opportunities for new entrepreneurs. New and profitable industries will be run by the new entrepreneurs, unless the descendants of upper-income groups do not shift to the new industries. However, Kuznets says that “the successful great entrepreneurs of today are rarely sons of the great and successful entrepreneurs of yesterday”. Therefore, Kuznets claims that the development of new industries stimulates social mobility by creating opportunities for different income groups.

Lastly, the improvement of the service sector reduces income inequality. The service sector is expected to grow as a result of the development process and rising GDP. In the earlier stages of development, the proportion of workers in industrial sector increases as the proportion of workers in agriculture declines. However, as economic growth continues the services sector starts to expand, while the agricultural sector continues to decline (Syrquin, 1988).

According to Kuznets, the growth of the service sector decreases inequality for several reasons. First, Kuznets argues that service incomes are mostly earned due to the individual excellence; thus, the higher levels of service incomes are not necessarily pursued by the descendants of the wealthier individuals. Kuznets also claims that the possibilities of rising income are limited for people who are already in high-income occupations. Hence, incomes of the lower-income workers in services are more likely to increase. Therefore, incomes are expected to be more equal within the services sector compared to industry.

In summary, Kuznets explains the change in income distribution as increasing in the first stage of development and declining in the later stages. With this explanation, Kuznets describes an inverse U curve relation between income and inequality. Urbanization is pursued together with industrialization; therefore, migration from rural to urban areas inherently increases inequality by raising the proportion of population of the more unequal part of the country. As the development process continues the income inequality declines, due to the factors like social mobility and improving service sector.

There are many extensions and criticisms that could made for Kuznets’s arguments on urban inequality. Firstly, the pace of social mobility is highly related with structural factors in the urban sector. Amongst the structural factors, the distinction between the urban formal and urban informal sectors could be considered as important.

For examining the migration process, unlike Harris and Todaro (1970), Cole and Sanders (1985) use a model that distinguishes the urban modern and urban subsistence sectors. According to Cole and Sanders (1985), it is more likely that the new arrivals would enter to the urban subsistence sector (mostly informal), in which barriers to employment are few and average income is lower compared to the urban modern sector. Many other studies (Benarjee, 1983; Rauch, 1993) claim that wages in the urban informal sector are equal to or slightly higher than the rural wages. However, the many migrants shift to the urban informal sector, preserving their hopes for finding a formal job in future.

The shares of informal-formal sectors change during the different phases of urbanization. According to Rauch (1993), the share of being “underemployed” in the informal sector follows an inverted U path as the economy urbanizes. Likewise the “Todaro paradox”, the growth of the urban formal sector attracts rural workers and leads to a greater growth in the urban informal sector. However, as urbanization proceeds, pressure on the land decreases and the agricultural income rises. The agents become less willing to leave the rural sector and be “underemployed” in the informal urban sector. Thus, the share of informal urban sector employment will start to decline. Since, the wages are generally lower in the urban informal sector; the inverted U curve of the informal urban sector share could also form an inverted U curve between the level of urbanization and within urban inequality.

The migrants could enter to the informal and formal sectors due to several factors. A study made for Bolivia (Pradhan and Van Soest, 1993) show that the education level is an important determinant of entering the formal sector. Pradhan and Van Soest show that factor like ethnicity and unemployment in the region are also important for determining the possibility of participating in the formal sector. Likewise in Bolivia, in India the education level is also an important factor for rising migrants’ possibility of being employed in the formal sector (Banerjee, 1983). The migrants with intermediate and higher level of education have a greater chance of getting employed in the formal sector. As expected, in many countries the return of education is also found to be higher in the formal sector (Pradhan and Van Soest, 1993; Banerjee, 1983; Funkhouser, 1997).

The growth of the informal sector could raise the urban inequality; however, the inequality could be reduced if there is a significant social mobility between the formal and informal sectors. Nevertheless, the social mobility might not be high for many cases. Banerjee (1983) shows that in 1976’s Delhi only 24% of those who entered the informal sector on arrival was switched to the formal sector. He also shows between the years 1965-1975, only 5-15% of the new arrivals were switched to the formal sector in a year. In addition, the potential mobility was found to be low; only 15% of the informal sector wage employees and 12% of the non-wage workers were actively looking a job in the formal sector.

The network of between the agents is important for enabling the mobility between the formal and informal sectors. In India, 60% of migrants who moved from the informal to the formal sector found out their current job with the help of their relatives and friends. The level of education is again found to be an important factor of mobility. The informal sector employees who have a middle school or intermediate college level education have a greater likelihood of shifting to the formal sector.

In summary, along with the other factors the access to education is an important factor for enabling the social mobility and reducing the urban inequality. The migrants or the children in the migrant families should have an access to an education to secondary or tertiary education for the process depicted by Kuznets to happen. One impediment of that is the usage of children as a labor force in the informal sector. Many of the children in the migrants’ families work (Acikalin, 2008), they cannot have an access to higher level of education. Also, the quality of the education that some children get is extremely low even for the primary school level, since they could not have time to focus on their school, while they are working.

Another extension that could be made to the Kuznetsian theory is related with the services sector. As we mentioned previously, Kuznets claims that the growth of services sector would reduce inequality, since the inequality in the services sector is lower compared to the industrial sector. The arguments of Kuznets on services are mostly relevant for the service sectors of 1950’s. However, the relations of production are significantly changed in many of today’s service sectors; employer-employee type of relations improved, whereas the proportion of self-employed is declining. Also, improvements on branding and franchising also created new opportunities for increasing the incomes of the wealthier individuals in the service sector. Therefore, the difference between the levels of inequality within the industrial and service sectors may not be great in today’s world, due to the developments in the services sector.

The property income is another issue that might create a need for the revision of Kuznets’s theory in today’s world. In fact, in his article “Quantitative Aspects of the Economic Growth of Nations”, Kuznets (1963) shows that “the shares of property in total income are lower in the less developed regions… they would tend to widen inequality less in the low income, underdeveloped regions than in the developed regions” in the United States.

The current literature on financialization also signs that the situation depicted by Kuznets might be true for the country wise comparisons. The US economy has the highest GDP per capita compared to other large scale countries[1]. Following the economic growth, the share of financial income has also risen in the US economy (Krippner, 2005; Crotty, 2009). The share of financial and real estate incomes reached to the level of 23% in 2001 and it continued to rise afterwards. In his empirical study, Frazer (2006) finds a modified inverted U curve with inequality rising after an income level. This result could be partially related with the higher urban inequality caused by the rising share of property incomes in the high income countries.

In his 1955 article, Kuznets does not focus on the changes in rural inequality. He explains the reduction in inequality majorly by the changes in the urban inequality. However, in his 1963 Kuznets develops an argument on the changes in rural inequality. He claims that:

“The rise in productivity within the A sector, indispensable for modern economic growth, may have been associated with technological changes that raised the scale of production on farms and introduced a cleavage between the large commercial farms in the progressive part of agriculture and the small units lagging behind, which would make for wider inequality of income within the A sector, at least until the process of modernization had been introduced throughout the sector.”

The technological improvements could increase the rural inequality for a period of time. As it happened in Philippines during the green revolution (Boyce, 1993), the “technological improvements” in agriculture might even lead to the centralization of land and would make the higher rural inequality permanent. However, in some cases the small scale farms can also compete with the large scale farms that are technologically developed. In fact, many recent studies (Sen, 1996; Griffin, Khan and Ickowitz, 2002) show that the small scale farms could have higher land productivity. It is true that the small scale farms could be technologically behind; however, the small scale farms have advantages on monitoring and effort. The large scale farms owned by absentee owners and cultivated by hired workers under supervision of a manager are often considered as inefficient. These farms have high monitoring costs and the effort shown by the workers is usually lower compared to the family farms. Also, the proportion of uncultivated land is higher in the large scale farms.

In summary, the small scale farms can compete with the large scale farms; the technological improvements followed by growth might or might not lead to a permanent rise in the rural inequality. Lastly, successful land redistribution could play an important role on changing the rural inequality. The rural inequality would be significantly reduced, if land is redistributed during the development process (Griffin, Khan and Ickowitz, 2002)

The cases of higher rural inequality

For developing his argument, Kuznets (1955) assumes that in any condition inequality in urban areas is larger than the inequality in rural areas. He says that ”It seems most plausible to assume that in earlier periods of industrialization, even when the nonagricultural population is relatively small in the total, its income distribution was more unequal than that of the agricultural population.”. Therefore, the population shift from relatively equal rural sector to unequal urban sector will firstly result in widening inequality.

The arguments of Kuznets could be challenged within his own context, for the cases in which Kuznets’s assumptions do not hold. In some countries, the socioeconomic structure could create cases that the rural population is more unequal than the urban population. In such cases, urbanization means shift to relatively egalitarian areas. Hence, urbanization could lead to a reduction in overall inequality, before the effects of social mobility is observed.

|Table - 1: The Income Inequalities in some countries |

|  |Rural Gini |Urban Gini |Total Gini |

|Argentina 1953 |0.50 |0.38 |0.41 |

|Argentina 1961 |0.49 |0.48 |0.43 |

|Bolivia 1996 |0.59 |0.51 |0.57 |

|Bolivia 1999 |0.63 |0.48 |0.58 |

|China 1982 |0.23 |0.12 |0.29 |

|China 1986 |0.26 |0.16 |0.33 |

|China 1991 |0.31 |0.18 |0.38 |

|Costa Rica 1961 |0.53 |0.47 |0.50 |

|Costa Rica 1981 |0.47 |0.43 |0.48 |

|Costa Rica 1991 |0.44 |0.43 |0.46 |

|Jordan 1980 |0.38 |0.34 |0.41 |

|Nigeria 1975 |0.43 |0.36 |- |

|Sierra Leone 1968 |0.60 |0.52 |0.60 |

|Turkey 1968 |0.57 |0.50 |0.56 |

|Turkey 1973 |0.52 |0.46 |0.50 |

|USA 1957-59 |0.42 |0.35 |- |

|USA 1960-62 |0.42 |0.35 |0.36 |

|Venezuela 1962 |0.45 |0.44 |0.54 |

Sources:

Argentina 1953, 1961; USA 1957-59, USA 1960-62 – Weisskoff R.(1976), Income distribution and economic growth in Puerto Rico, Argentina and Mexico

Bolivia 1996, 1999; Costa Rica 1981, 1991; Nigeria 1975; – UNUWIDER (2008), World Income Inequality Database V2.0c

China 1982, 1986, 1991; Costa Rica 1961; Jordan 1980; Sierra Leone 1968; Venezuela 1962 – Deininger

K. and Squire L. (1996), “A New Data Set Measuring Income Inequality”, World Bank Economic Review V. 10, No 3 Pp. 565-591

Turkey 1968 - Bulutay,T., Timur,S.and Ersel,H.(1971),Türkiye’de Gelir Dağılımı, Ankara:SBF.

Turkey 1973 - SPO (1976), Gelir Dağılımı 1973, Ankara

One objection to this argument could be brought by Robinson (1976). According to Robinson, the U curve will be formed even in the condition, where rural inequality is higher. He shows that the parabolic relation between inequality and income will be formed in any case as long as the shift of population from rural to urban sector continues. However, in his model Robinson assumes that both within rural and urban inequalities and income gap between urban and rural sectors are constant. We have no rational reason to believe that these measures will stay constant during the development process, in fact empirically Robinson’s assumption is disproved (Anand and Kanbur, 1993). The within inequalities or the rural-urban income gap could change as the development process continues. In the cases where the within rural inequality or the rural-urban income gap are consistently declining, the parabolic relation between income and inequality might not exist. In addition to that, there is a greater chance of the U curve not to be formed, if rural inequality minus urban inequality is larger.

Table-1 shows some cases where the inequality is larger for the rural population. There could be several reasons of higher rural inequality depending on the structural conditions of the country. In most of the cases, the high rural inequalities are caused by unequal land distribution. For example, in the cases of Venezuela and Costa Rica where higher rural inequalities were observed, the Gini coefficients of land concentration for the early 1970’s are estimated as 0.82 and 0.91 respectively (Otsuka, Chuma and Hayami, 1992).

The higher rural inequality within the United States is realized by Kuznets as an exceptional case. According to Kuznets (1963), the higher inequality in rural areas could be related with the unequal distribution of income in the rural South and West, “the former because of the cleavage between Negroes and whites, and the latter because of the cleavage between large-scale, capital intensive farms and smaller units”. Thus, Kuznets explains the high rural inequality in the US, both with the extending effects of slavery and the large scale agricultural production.

The Turkish case

The high rural inequality, which was observed in 1968’s and 1973’s Turkey was an inheritance of economic structure in Ottoman Empire. In fact, the traditional relation of production in Ottoman Empire is defined as an Asiatic mode of production by many scholars (Divitçioğlu, 1967), since most of the surplus was expropriated by agricultural state taxes. However, starting from the eighteenth century, a landlord class developed from the local tax collectors and state officers. The formation of this structure led to greater land inequality and the emergence of semi-feudal relations of production.

The traditional relations of production in Ottoman Empire is explained by the timar system. According to the timar system, the sipahis (cavalrymen) had the privilege of collecting land surplus in from of taxes. In exchange, they gave support to the Ottoman army (Islamoglu & Keyder, 1987). However, it must be noted that the timarholders were not the owners of the land and the privilege of being timarholder was not surely inherited by the other generations. The sultan, in fact, could take the privilege of holding timar freely. Since all of the timars were given by the sultan directly, the timarholders rarely transformed into feudal landlords (Divitçioğlu, 1967). Therefore, many scholars like Divitçioğlu claims that the timar system is a form of Asiatic mode of production rather than being a form of feudal mode of production.

During the sixteenth century, as a result of decreasing revenues and increasing expenditures, the Ottoman state faced with a fiscal bottleneck (Islamoglu & Keyder, 1987). For overcoming the fiscal bottleneck, the Ottoman state leased out the privilege of collection of taxes. The collection of taxes was issued to the tax farmers who were mostly state officers. This led to a crucial change in the relations of production. The leaseholders started to substitute the state and inclined to maximize their share of production and squeeze peasants (reaya) to achieve their goals (Inalcik, 1991). However, under a short lease, tax farmers aimed short-term maximization, which resulted in the ruin of the area. Therefore, Ottoman state introduced the malikane system, in which collection of taxes is issued to tax farmers on a life-time basis. The formation of the malikane system naturally led to the development of semi-feudal relations of production within the rural areas.

In addition to malikane, plantation-like large scale farms called Ciftliks emerged during the eighteenth century (Inalcik, 1991). According to the ciftlik system, large, waste or abandoned lands were issued to the local notables with influence and wealth. The aim of this operation was land reclamation; therefore, the beneficiaries had to make necessary investments such as irrigation works (Veinstein, 1991). Ciftliks became the farms that were economically motivated to maximize the revenues under the impact of growing European demand. The labor force was formed by landless peasant, who worked in ciftlik lands as paid agricultural workers or sharecroppers.

In Eastern Anatolia, ownership of some sancaks (administrative unit in Ottoman Empire) were given to local tribal leaders called beys, who in exchange paid a certain amount of tax and provided soldiers to the state in the necessary conditions (Aydin, 1986). The lands of beys were inherited by their children, and the state could not dismiss the local bey or appoint a new bey to the sancak. Thus, a form of semi-feudal relations of production was observed in Eastern Anatolia. After the sixteenth century, weakening of Ottoman state led to Ottoman state’s loss of control over these lands and beys took almost total control of the land.

The development of the relations of production in Ottoman resulted in a great inequality in land distribution. The agricultural survey of 1912-1913 exhibits the extent of land inequality during the last age of Ottoman Empire. The survey shows that 5% of rural households, who were mostly feudal landlords or agas (owners of the villages), were holding 65% of the land. 8% of rural households were landless and the rest of the 87% of rural households only had 35% of the total land (Koymen, 2008).

After the foundation of Turkish Republic in 1923, many of the tax-collectors (multezims) lost their economic power due to several reasons. In 1925, the tax-collecting system was modernized. In addition with the acceptance of private property in land in 1926, some of peasants who proved that they were the users of the land became the real owners of the land, which were previously controlled by multezims (Aydin, 1986). However, the land inequality still continued during the early period of the republic. The agricultural survey of State Statistical Institute shows that in 1927, 76% of peasants only owned 7% of the total land (Koymen, 2008). The data for 1950 and 1970 also exhibits that land inequality existed during the following periods (Table - 2).

|Table 2: Regional Land Distribution in Turkey |

|(1950,1970) |

|  |1950 |1970 |

|Midnorth |0.63 |0.57 |

|Aegean |0.76 |0.54 |

|Marmara |0.47 |0.53 |

|Mediterranean |0.93 |0.64 |

|Northeast |0.58 |0.59 |

|Southeast |0.80 |0.70 |

|Black Sea |0.47 |0.53 |

|Mideast |0.66 |0.57 |

|Midsouth |0.74 |0.59 |

|  |  |  |

|TURKEY |0.73 |0.62 |

Source: Unal (2008)

Some scholars like Caglar Keyder (1983, 1989) claim that Turkish agriculture has historically characterized by the predominance of independent small-scale peasantry and landless peasantry do not constitute a crucial category within the rural society. It is true that most of the peasants in Turkey had a land; however, at least until 1970s, the scale of land that peasants owned was very small. According to the agricultural survey of 1970, 75.1% and 48.2% of farms were smaller than 50 and 20 decares respectively. Koymen (2008) claims that production level below 50 decares insufficient for sustaining a life above the poverty level. Therefore, although most peasant owned a land, a large amount of peasants were either living below the poverty line or were enrolling in other activities (sharecropping, seasonal work, husbandry etc.) for sustaining a reasonable income level. 1970 agricultural survey also shows that 3.2% of rural households owned 41.7% of total land, which again exhibits the extent of high rural inequality. It might be reasonable to assume that many of the unregistered land were not declared in agricultural surveys. However, according to Aydin’s (1986) field study, de facto owners of undeclared land were mostly large landowners. Thus, we can claim that undeclared lands result in a downward bias in the calculations of rural inequality.

One of the reasons of high rural inequality was the semi-feudal structure that even still exists in Southeast Anatolia. With the acceptance of private property in land in 1926, multezims lost their influence in Southeast Anatolia; however, tribal leaders and big land owners (beys) who were the de facto owners of land became the de jure owners called agas (Aydin, 1986). Agas are not only the landowners; they have influence over peasants beyond their economic power. Peasants serve as corvee laborer and they have to do all kinds of duties issued by aga. If they refuse to do orders, aga would either expel them from village or mistreat them. Peasants cultivate agas’ land usually by different forms of sharecropping agreements; however, landless agricultural laborers also work in agas’ lands as wage laborers.

Another reason for the high rural inequality in Turkey could be the privileges, which were given to large-scale landlords during the early periods of the republic. During 1920’s and 1930’s, mostly large landowners benefited from the credits given by the state-owned commercial bank Ziraat Bankasi. Large landowners’ privileges on reaching credits encouraged the usury activities. In many cases, large landowners could get a loan with reasonable interest rates and lend this money with interest rates that reached to the levels of 120-600%. According to Boratav (1969), through the usury activities, the usurer expropriated an important part of small-scale peasant’s surplus. Koymen (1981) claims that usury activities also changed land distribution significantly. Many of the peasants who cannot pay their loans had to sell their land to large landowners.

After the Second World War, the Turkish government started to use the Marshall Plan aid to finance the importation of agricultural machinery. The number of tractors jumped from 2000 in 1948 to 42000 at the end of the 1950s. The aid was distributed through state-owned commercial banks for encouraging tractor purchases; however, mostly large landowners benefited from these loans. By 1963, poorer 68.8% of farms only had 20% of tractors; whereas, the richest 0.5% owned 26% of tractors (Koymen, 2008). The unequal distribution of tractors was one of the reasons of high rural inequality, which was observed in 1968 and 1973 surveys.

A Simple model for explaining the Kuznets process

The Kuznets process in Turkey can be explored by decomposing inequality to its components. Gini Index is the most commonly used index in inequality analysis. However, for a decomposition analysis, Theil Index could give stronger results compared to Gini Index. The reason for that is that Gini Index cannot be fully decomposed into between and within components. Along with between and within components, the decomposition of Gini index gives an extra “intensity of transvariation” term (Dagum, 1997); whereas Theil index can be decomposed into between and within components without having a residual term. Therefore, for this analysis Theil Index is preferred for more accurate decomposition of inequality.

By using Theil Index, the overall inequality T can be decomposed into within and between sector components TW and TB in the following way:

(1) [pic]

For exploring the Kuznets process, we assume that both within and between components are dependent on population share of urban sector, which is defined as x. The overall inequality can be rewritten by decomposing within component into urban and rural components TU and TR:

(2) [pic][pic]

Here RU and RR are respectively production shares of urban and rural sectors in the whole economy. It could be reasonable to assume that share of production increases with the rise in urban population. For analyzing the impact of urbanization on overall inequality, we calculate first order conditions of T with respect to urban population share (x):

(3) [pic]

Since R’U(x) = - R’R(x), the equation could be written as:

(4) [pic]

The equation above gives an insight about the development process explained by Kuznets (1955). Kuznets assumes that urban sector has always higher inequality compared to rural sector. He claims that moving from relatively equal urban distribution to relatively unequal rural distribution increases the inequality in the early phase of development. This argument can be seen in the first and third terms. The first term is naturally positive, if urban inequality is greater. The between inequality component (TB) also increases in the first phase of development. Anand and Kanbur (1993) show that the relation between share of urban population (x) and between inequality component (TB) is inverse U shaped even, if the urban-rural mean income gap is constant. The reason for that is that the contribution of between inequality converges to zero in the economies that are totally urban or rural (Figure-1). In addition to that, Kuznets claims that the productivity gap between the rural and urban sector increases in the first phase of development. Anand and Kanbur show that if Kuznets’s assumption is followed the peak of U curve gets greater and the slopes at the end points become even steeper. Therefore, TB’(x) > 0 assumption is valid for explaining Kuznets’s theory, when the value of x is smaller. Therefore, assuming that within rural and urban inequalities are not declining, growth of urban sector surely raises inequality in the early stage of development. As the development process continues, for higher values of x, both RU’ < 0 and TB’(x) < 0 conditions would be satisfied. This would lead to a decline in overall inequality and the development process would fit to Kuznets Curve.

[pic]

However, the interpretations of Kuznets Curve could change for the conditions in which rural sector is more unequal or urban and rural inequalities decline with the growth of urban sector. In these cases, the following condition can be satisfied for all x values and the overall inequality could consistently fall down.

(5) [pic]

The condition above might explain the inequality in Turkey (Figure-2). The income distribution statistics for Turkey show that inequality in Turkey has a downward trend during the industrialization period (Table-3). The first statistic presenting urban and rural inequality is the statistic for the year 1968. During 1968, urban share of population was 36.8%. The urban share of population consistently rose after 1968; it reached to 43.9% in 1980, 53.0% in 1985 and 59.0% in 1990. However, the rapid growth of urban sector did not seem to lead to a systematic increase in inequality.

[pic]

In Turkey, firstly, rural inequality was greater than urban inequality in the years 1968 and 1973. Thus, unequal urban sector assumption of Kuznets does not hold for Turkey and there was a movement from unequal to equal sector. Hence, the first term of equation (5) was negative for a period. Secondly, inequalities in the urban and rural sectors changed. The inequality in the urban sector did not rise with urbanization (except the year of economic crisis 1994) and a significant decline was observed for the rural inequality. Thus, the second term of equation (5) is probably negative. These two conditions reduce the [pic] and hence [pic] can be negative even when the urban sector is rapidly growing. Thus, the Turkish case shows that Kuznets process might not hold if Kuznets’s assumptions are changed.

We can explain the changes in long-term Turkish inequality by using a simple empirical analysis. For the empirical analysis, the Theil entropy indices for the years 1968, 1973, 1987 and 2004 are calculated (Table – 4). The years 1968, 1973 and 1987 were selected for calculations, since the first three relatively reliable income distribution surveys were done for these years. The inequality for 1963 was not being estimated by household surveys, it was rather calculated by using the land distribution estimated in agriculture surveys and the values of income taxes and social security premiums paid. Thus, 1963 income distribution study cannot capture the informal economy. The years 1994 and 2002 were not used for calculations, since the inequality for these years are biased, due to the effects of the economic crises in 1994 and 2001. I rather used the year 2004, which does not reflect the short-term effects of economic crises on distribution. Theil values for 1968 and 1973 were estimated by using the income distribution data of Bulutay, Timur and Ersel (1971) and State Planning Organization (1973) respectively. For the years 1987 and 2004, data of Turkish Statistical Institute - State Institute of Statistics was used.

|Table - 3: Inequality in Turkey |

|  |Gini - Total |Gini - Urban |Gini - Rural |

|1963 |0.55 |- |- |

|1968 |0.56 |0.50 |0.57 |

|1973 |0.50 |0.46 |0.52 |

|1987 |0.43 |0.44 |0.42 |

|1994 |0.49 |0.51 |0.41 |

|2002 |0.44 |0.44 |0.42 |

|2003 |0.42 |0.42 |0.39 |

|2004 |0.40 |0.39 |0.37 |

|2005 |0.38 |0.38 |0.37 |

|2006 |0.43 |0.42 |0.41 |

|2007 |0.41 |0.39 |0.38 |

|2008 |0.41 |0.40 |0.38 |

Sources :

1963 - Çavuşoğlu, T., and Y. Hamurdan(1966), Gelir Dağılımı Araştırması 1963, SPO, Ankara.

1968 - Bulutay,T., Timur,S.and Ersel,H.(1971),Türkiye’de Gelir Dağılımı, Ankara:SBF.

1973 - SPO (1976), Gelir Dağılımı 1973, Ankara

1987 – SIS (1990), 1987 Hanehalkı Gelir ve Tüketim Harcamaları Dağılımı Sonuçları, Ankara

1994 – SIS (1996), 1994 Hanehalkı Dağılımı Anketi Sonuçları, Ankara

2002-2008 – TURKSTAT, Household Income Distribution Statistics (.tr)

|Table - 4: Decomposition of inequality according to urban-rural segmentation |

|  |Urban Pop.(%) |Gini |Theil - Total |Theil - Urban |Theil - Rural |Theil - Between |

|1968 |36.8 |0.56 |0.664 |0.519 |0.685 |0.056 |

|1973 |40.4 |0.50 |0.527 |0.462 |0.557 |0.015 |

|1987 |55.3 |0.43 |0.375 |0.392 |0.329 |0.009 |

|2004 |68.0 |0.40 |0.293 |0.284 |0.263 |0.014 |

Table 4 exhibits Theil values for within and between urban-rural inequalities in Turkey. According to the analysis, the inequality between rural and urban areas has only small impact on the overall inequality. The inequality for the given years is mostly explained by the within inequalities in urban and rural areas. Therefore, change in overall inequality is mostly related with change in within inequality.

The reasons behind the reduction in inequality could be predicted by the equation 4:

(4) [pic]

For estimating impact of the first term ([pic]), which we call Kuznets effect, we assume that gap between within urban and rural inequalities move towards one direction between the given years. Thus, we multiply rate of urbanization with the higher and lower differences between within urban and rural inequalities for the given period. By this method, we find a range showing the possible contribution of Kuznets effect on overall inequality. The second ([pic]) and third ([pic]) terms give impact of changes in urban and rural inequalities on overall inequality. For calculating the range of second and third terms, we again assume that these terms move towards one direction between the given years. We multiply the rate of urbanization with the larger and smaller values of within urban and rural inequalities for the given period. Lastly, we estimate impact of the change in between inequality ([pic]) by a simple subtraction.

|Table - 5: Decomposition of changes in Theil values |

|Period |Change in Overall|Kuznets Effect |Change in Urban |Change in Rural |Change in Between |

| |Theil | | | | |

1968-1973 |-0.129 |-0.006 |-0.003 |-0.021 |-0.023 |-0.081 |-0.077 |-0.041 | |1968-1987 |-0.289 |-0.031 |0.012 |-0.047 |-0.070 |-0.225 |-0.158 |-0.047 | |1973-1987 |-0.160 |-0.014 |0.009 |-0.028 |-0.039 |-0.135 |-0.101 |-0.006 | |1987-2004 |-0.082 |0.007 |0.003 |-0.060 |-0.073 |-0.029 |-0.021 |-0.014 | |

Table 5 exhibits the decomposition of changes in overall Theil index for the given periods. The first values for the Kuznets effect [pic]and impact of changes in within urban ([pic]) and rural ([pic]) inequalities are calculated by using the conditions of the previous year and the second values are calculated by using the conditions of the latter year.

The results show that the path suggested by Kuznets was not followed in the Turkish case. The direct effect of urbanization on inequality was slightly negative for the period 1968-1973, since the rural inequality was higher for this period. For the period 1973-1987, the value of Kuznets effect is between -0.014 and 0.009. The rural inequality was relatively higher in 1973; however, for 1987 the rural inequality was lower. Therefore, for the period 1973-1987, we can say that the urbanization first had direct negative and then had direct positive impact on the Theil value. In summary, the shift from rural to urban areas did not directly increase the overall inequality during the early phase of industrialization.

The estimations also exhibit that the long-run reduction in inequality is highly related with the decline in rural inequality. The rural inequality was significantly reduced between 1968-1987. The decline in rural inequality could be explained by several reasons. Firstly, a large proportion of migrants came from either small-landowning or landless families[2]. The migration of landless peasants could immediately have reduced the rural inequality by logic, since the poorest individuals left the rural distribution without transferring any assets to the richer ones. In addition, the benefits like remittances accruing to migrants’ families or relatives would probably have pulled the level of rural inequality down. Thus, urbanization could have an indirect impact on the reduction of rural inequality.

Secondly, a spillover in agricultural technology was observed after 1960s. In 1967’s Turkey, there were only 75000 tractors. These tractors were mostly owned by a privileged group of large landowners (Kepenek & Yenturk, 2005). However, the number of tractors in Turkey increased to 136000 in 1972 and jumped to 655000 in 1988 and 875000 in 1997. The spillover of agricultural technology could have positive effects on rural inequality.

Tables 4 and 5 also show that urban inequality slightly decreased between 1968-1973 and 1973-1987, although urbanization process continued. The decline in urban inequality for the 1968-1973 period could easily be explained by the rising labor movements (Boratav, 2005). As a result of the labor movements, wage share in manufacturing industry increased from 25.2% in 1968 to 27.1% in 1973 and 38.3% in 1979.

However, the gains of labor movements were mostly lost with the anti-labor policies followed after the 1980 military coup. Therefore, labor movements cannot explain the decline in urban inequality for the periods 1973-1987 and 1987-2004. The decline in urban inequality for these periods could be partially explained by the “social mobility” effects suggested by Kuznets (1955) for the later stages of development. As suggested by many scholars (Cole and Sanders, 1985; Rauch, 1993; Karpat, 1976), it is reasonable to assume that most of the migrants first moved to the informal sector. Thus, ratio of non-agricultural labor with social insurance was only 43.8% in 1967 and 42% in 1972 (Kepenek and Yenturk, 2005). However, in time, workers in informal sector moved to the formal sector; the non-agricultural labor with social insurance increased to 70.9% in 1990 and 75.9% in 2004. The raise in the ratio of formal workers could have decreased the urban inequality.

Lastly, between inequality declined during the examined periods. The impact of decline in between inequality is more noticeable for the 1968-1973 period. This result is consistent with Dervis and Robinson (1980)’s analysis. Dervis and Robinson show that the Kuznets Ratio in Turkey declined between 1968-1973, since terms of trade changed in favor of the rural sector. Following Lewis (1954)’s argument, we can say that the relative growth of the capitalist sector could have shifted the terms of trade in favor of the rural sector and reduced the between income inequality in Turkey.

Conclusion

This study explores the effects of urbanization on the changes in income distribution. The changes on inequality are analyzed within the Kuznetsian framework and Kuznets’s U curve argument is examined in a critical way. The urbanization followed by industrialization can change inequality by many ways. As urbanization continues, the urban share raises; changes are observed both in between and within urban and rural inequalities. Kuznets brings some explanations on how development changes the structure of inequality. However, the path that inequality will follow is also related with the internal dynamics of a country.

Kuznets claims that the first stage of industrialization increases inequality by raising the proportion of the population in the unequal part (urban) of the society. However, there are indeed studies that show that urbanization has counterbalancing effect against the income gaps caused by the rapid industrialization. Kuznets’s assumption on higher urban inequality could also be wrong for many cases, which could disprove Kuznets’s arguments within his own framework. There are in fact cases shown in this study, where the inequality in the rural areas is greater due to the countries’ socioeconomic structure.

In this study, we examined the Turkish case in which rural inequality was greater at the earlier stages of development. Unlike Kuznets’s arguments, urbanization did not lead to greater inequality during the first stage of Turkey’s development. The direct impact of shift from rural to urban sector on inequality was not negative for the early phase of urbanization. In fact, urbanization reduced the inequality in Turkey by decreasing the rural inequality and closing the urban-rural income gap. The reduction in inequality pursued during the latter stages of development with the “social mobility” effects suggested by Kuznets.

References

Acikalin N. (2008), “Poverty and the Social Mobility Chances of Youth Generations: A Case Study in Istanbul and Gaziantep”(in Turkish), The Journal of International Social Research, Volume 1/3

Ahluwalia, M.S.(1976), “Income Distribution and Development: Some Stylized Facts”, American Economic Review, 66

Anand, S. and Kanbur, S.M.R.(1993) “The Kuznets process and the inequality-development relationship”. Journal of Development Economics, 40, pp. 25–52

Aydin, Z. (1986), Underdevelopment and rural structures in Southeastern Turkey: the

household economy in Gisgis and Kalkana, Ithaca Press

Becker, C. M., (2007), "Urbanization and Rural-Urban Migration," in ed. by Dutt A. and J. Ros, International Handbook of Development Economics, Cheltenham, United Kingdom, and Northampton, Massachusetts: Edward Elgar.

Banerjee, B., (1983), “The Role of the Informal Sector in the Migration Process: A Test of Probabilistic Migration Models and Labour Market Segmentation for India.”, Oxford

Economic Papers, 35, 399-422.

Boratav (1969), Gelir Dagilimi, Gercek Yayinevi: Istanbul

Boratav (2005), Turkiye Gelir Dagilimi, Imge Kitabevi

Bourguignon, F. and C. Morrisson (1998), "Inequality and Development: The Role of Dualism," Journal of Development Economics 57(2), 233-258

Boyce, J.K. (1993) The Philippines: The Political Economy of Growth and Impoverishment in the Marcos Era. London: Macmillan

Bulutay,T., Timur,S.and Ersel,H.(1971), Türkiye’de Gelir Dağılımı, Ankara:SBF.

Cole, W. E. and R. D. Sanders (1985), ”Internal Migration and Urbanization In The Third World”, American Economic Review 75, 481-93

Crotty, J. (2009), “Structural causes of the global financial crisis: a critical assessment of the ‘new financial architecture’”, Cambridge Journal of Economics, 33, 563–580

Çavuşoğlu, T., and Y. Hamurdan(1966), Gelir Dağılımı Araştırması 1963, SPO, Ankara.

Dagum, C. (1997), “A New Approach to the Decomposition of the Gini Income Inequality Ratio”, Empirical Economics, 22:515-531

Deininger K. and L. Squire (1996), “A New Data Set Measuring Income Inequality”, World Bank Economic Review V. 10, No 3 Pp. 565-591

Dervis K. and S. Robinson (1980), "The Structure of Income Inequality in Turkey in Turkey, 1950-1973", in E. Özbudun and A. Ulusan (eds.), The Political Economy of Income Distribution in Turkey, Holmes and Meier, New York

Divitçioğlu, S. (1967), Asya Tipi Üretim Tarzı ve Osmanlı Toplumu, YKY, Istanbul

Frazer, G. (2006), “Inequality and development across and within countries”, World Development, 34(9), 1459–1481

Funkhouser E. (1997), “Demand-Side and Supply-Side Explanations for Barriers to Labor Market Mobility in Developing Countries”, Economic Development and Cultural Change, Vol. 45, No. 2, pp. 341-366.

Griffin, K.B., Khan, A.R. and Ickowitz, A. (2002) ‘Poverty and the Distribution of Land,’ Journal of Agrarian Change 2(3): 279-330

Harris J. and M. Todaro (1970). “Migration, Unemployment & Development: A Two-Sector Analysis”, American Economic Review, March 1970; 60(1):126-42.

Islamoglu H. and Keyder C., (1987) Agenda for Ottoman History, The Ottoman Empire

and the World-Economy, Ed. Islamoglu-Inan H., Cambridge: Cambridge University Press

Karpat K. (1976), The Gecekondu: Rural Migration and Urbanization, Cambridge University Press

Kepenek Y. and N. Yenturk (2005), Turkiye Ekonomisi, Remzi Kitabevi

Keyder, C. (1983), "Paths of rural transformation in Turkey", Journal of Peasant Studies,

Vol. 11 pp.34 - 49.

Keyder, C. (1989), “Social Structure and the labour market in Turkish agriculture”, International Labour Review, Vol. 128, No. 6

Koymen, O. (1981), Turkiye’de Tarimsal Yapinin Gelisimi: 1923-1938, Bogazici

Universitesi: Istanbul

Koymen, O. (2008), Kapitalizm ve Koyluluk: Agalar, Uretenler, Patronlar, Yordam Kitap

Krippner G.(2005), “The Financialization of the American Economy,” Socio-Economic Review, Vol. 3, pp. 173-298

Kuznets S. (1955) “Economic growth and income inequality”, American Economic Review, 45, 1–28.

Kuznets, S. (1963). “Quantitative Aspects of the Economic Growth of Nations”, Economic Development and Cultural Change, 11 2, pp. 1–80.

Kuznets, S. (1966), Modern Economic Growth: Rate, Structure and Spread. New Haven and London: Yale University Press

Lall S. V., Selod, H. and Z. Shalizi (2006), “Rural-Urban Migration in Developing Countries: A Survey of Theoretical Predictions and Empirical Findings”, World Bank Policy Research Working Paper No. 3915

Lewis, W. A. (1954), “Economic development with unlimited supplies of labour”. The Manchester School.

Lipton M. (1982), “Migration from Rural Areas of Poor Countries: The Impact of Rural Productivity and Income Distribution” in Sabot R.H. (ed.), Migration and the labor market in developing countries, Colo. : Westview Press

Otsuka, K.; Chuma, H and Y. Hayami (1992), “Land and Labor Contracts in Agrarian Economies: Theories and Facts”, Journal of Economic Literature, V. 30, pp. 1965-2018

Pradhan, M. and A. Van Soest, (1995), “Formal and Informal Sector Employment in Urban Areas of Bolivia.”, Labor Economics, 2, 275-297.

Ranis, G. and J. C. H. Fei (1961). "A Theory of Economic Development," American Economic Review, 51: 533-565.

Rauch, J. E. (1993). "Economic Development, Urban Underemployment, and Income Inequality", Canadian Journal of Economics, vol. 26(4), pages 901-18,

Ravallion, M., Chen, S. and P. Sangraula (2007), “New Evidence on the Urbanization of Global Poverty”, World Bank Policy Research Working Paper No. 4199

Robinson, S. (1976), “A note on the U hypothesis relating income inequality and economic development.”, American Economic Review 66, 437–440.

Sen, A.K. (1996) ‘Employment, institutions, and technology: Some policy issues,’ International Labour Review 135: 445-471

SPO (1976), Gelir Dağılımı 1973, Ankara

Stiglitz J. (1982) “The Structure of Labor Markets and Shadow Prices in LDC’s” in Sabot R.H. (ed.), Migration and the labor market in developing countries , Colo. : Westview Press

Syrquin, M. (1988), “Patterns of Structural Change” in H. Chenery and T.N. Srinivasan (eds.), Handbook of development economics, vol. 1, Amsterdam: North-Holland, 203-273.

Unal F. G. (2008), “The Impact of Land Ownership Inequality on Rural Factor Markets”,

Phd Dissertation: University of Massachusetts-Amherst

World Bank (2009), World Development Report: Reshaping Economic Geography

Weisskoff R.(1976), “Income Distribution and economic growth in Puerto Rico, Argentina and Mexico” in A. Foxley(ed.), Income Distribution in Latin America Cambridge University Press

-----------------------

[1] In fact, the United States has the sixth largest GDP per capita in the world (IMF, 2010). However, the top five countries Qatar, Luxembourg, Singapore, Norway and Brunei have a population smaller than 5 million; they could be considered as small scale if we use population as a criterion.

[2] In a study made for Turkey, Karpat (1976) shows that most migrants explain their decision by push factors like low soil productivity, lack of good cultivable land, irrigation, water, division of properties into small parcels etc.. 77% of men and 65% of women migrants explain their behavior by push factors related with poverty, whereas only 8% of men and 7% of women give “search for a better future” as their reason for leaving village. ÂÙ[pic]EÚ[pic]{Ú[pic]BÛ[pic]CÛ[pic]™Û[pic]šÛ[pic]ÐÛ[pic]ÑÛ[pic]ÒÛ[pic]åÛ[pic]þÛ[pic]ÿÛ[pic]Ü[pic]“Ü[pic]·Ü[pic]ÔÜ[pic]ÕÜ[pic]ÖÜ[pic]×Ü[pic]ØÜ[pic]ÙÜ[pic]üÝ[pic]ýÝ[pic]þÝ[pic]µß[pic]ä[pic]oä[pic]pä[pic]qä[pic]rä[pic]tä[pic]uä[pic]wä[pic]xä[pic]zä[pic]{ä[pic]~ä[pic]ä[pic]ùñùíùéùÙéùñùñùñùÕÎÊùµ«§Ÿ?Ÿ§™‘™‘™‘™‘™ÃAydin (1986)’s field study also shows that the migrants in Southeast Anatolia were mostly poorer individuals.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download