AI Summary & Key Takeaways
AI InsightThe empirical findings reveal that while aggregate panel-wide estimates show no generalized, statistically significant baseline effect on income inequality in either the short or long run, this average neutrality masks extensive regional economic asymmetry.
📌 3 Key Takeaways
Abstract
This study explores the dynamic relationship between electricity consumption and income inequality across 26 NUTS-2 regions in Türkiye, employing second-generation panel data methodologies that explicitly account for cross-sectional dependency and slope heterogeneity. The Westerlund panel cointegration test verifies a long-run equilibrium relationship specifically when the Gini index is treated as the dependent variable. A Cross-Sectionally Augmented Error Correction Model (CS-ECM) under a Panel Mean-Group framework is estimated, complemented by the bootstrap Dumitrescu–Hurlin panel Granger non-causality test. The empirical findings reveal that while aggregate panel-wide estimates show no generalized, statistically significant baseline effect on income inequality in either the short or long run, this average neutrality masks extensive regional economic asymmetry. In the long run, electricity expansion significantly exacerbates income inequality in highly industrialized regions, including TR41, TR22, and TR21, where infrastructure benefits disproportionately tilt toward capital owners and high-skilled labor. Conversely, energy expansion acts as a powerful socio-economic equalizer by significantly reducing inequality in developing and agricultural zones such as TR61, TR52, and TRB1. Furthermore, region-specific Granger causality tests unveil distinct localized causal loops, displaying uni-directional paths running from electricity to inequality in TR22, TR33, and TR21, and a reverse feedback loop from inequality to energy demand in TR31. Policymakers must deploy targeted, region-specific interventions such as pairing energy infrastructure investments with progressive local taxation in industrial hubs and utility subsidies for rural cooperatives to ensure that utility growth fosters equitable social welfare nationwide, rather than implementing blanket, centralized energy frameworks are inadequate.