International Congress on Eurasian Economies

26-28 June 2024 – Bishkek, KYRGYZSTAN

Paper properties

Paper ID : 2543
Status : Paper published
Language : English
Topic : Growth and Development
Presenter: Asst. Prof. Dr. İpek Tekin
Session : 6A Growth & Development

A Vicious Circle: The Interaction between Income Distribution and Household Indebtedness in the Neoliberal Era
A Vicious Circle: The Interaction between Income Distribution and Household Indebtedness in the Neoliberal Era

• Asst. Prof. Dr. İpek Tekin (Çukurova University, Türkiye)
• Assoc. Prof. Dr. Başak Gül Akar (Çukurova University, Türkiye)

Abstract

In the neoliberal era, financialization of the economies is associated both with large-scale speculative movements in the financial sector and over-indebtedness. The fact that there were significant increases in household indebtedness in the United States before the 2008/09 global financial crisis made the growing indebtedness an outstanding issue that should be examined in terms of its supply and demand-side causes and its distributive consequences. Increasing inequality in income distribution has been an important consideration associated with the increase in household indebtedness. In a sense, the borrowing opportunities enable working households to maintain their consumption and living standards in the short term despite the stagnation in wages and thus increasing inequality, but it does not prevent them from undergoing an unsustainable debt burden. This debt burden creates a feedback effect by deepening the existing inequality. The purpose of this study is to reveal the macro and micro dynamics associated with neoliberal policies that create the supposed relationship between inequality and household indebtedness and to try to interpret the increasing household indebtedness and income inequality in Turkey in the 2000s within this framework.

JEL codes: D10, D30, E44

Tekin, İpek, Akar, Başak Gül (2021). "A Vicious Circle: The Interaction between Income Distribution and Household Indebtedness in the Neoliberal Era" in Proceedings of International Conference of Eurasian Economies 2021, pp.163-173, Istanbul, TURKEY and ONLINE.

DOI: https://doi.org/10.36880/C13.02543

Full paper in PDF format.

Session 6A: Growth & Development