The impact of regional inequality on economic growth: a spatial econometric approach (original) (raw)
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The interaction of inequality and growth and the direction of causality in this relationship have been an extensively discussed topic with several questions but without clear answers both in the theoretical and empirical literature. The current paper contributes mainly into the new economic geography (NEG) literature by focusing on the member states of the European Union. The purpose of the paper is to shed light on the effect of the economic development level and speed of growth on the relationship between economic growth and regional inequality. The research hypothesis of a significant interrelation between regional inequality and economic growth is discussed based on the models of NEG. The empirical part of the paper relies on the regional data of the 27 European Union member states at the classification level NUTS 3 over the period 1996–2006. The results of the empirical analysis allow us to conclude that regional inequality has a pro-cyclical character: regional inequalit...
The impact of regional disparities on economic growth
The authors investigated how economic growth affects the disparity in the distribution of regional income in Poland and vice versa. The research was based on annual data covering the period 2000-2009. In general, the research was divided into two main parts. First, the authors examined the evolution of the level of spatial inequalities in income in Poland over the last decade using the concepts of sigma and beta convergence. Next the nature of causal dependences was investigated between this inequality and economic growth. It was found that Polish regions did not converge with respect to the distribution of income as total GDP grew. The second part of the research provided evidence to claim that this inequality caused growth. Moreover, the evidence was also found that growth affected regional inequality. Finally, the authors noticed that the effects of both these factors were positive. The results suggest that as a consequence of rapid economic growth, some regions in Poland seized new opportunities, while less developed regions were unable to keep up with the challenging requirements of a decade of fast economic growth.
On the measurement of regional inequality: does spatial dimension of income inequality matter
Annals of Regional Science, 2007
The paper concerns selected theoretical and empirical aspects of the decomposition of income inequality by spatially defined subgroups. Special consideration is given to the implications for measurement and comparison of regional inequality. The decomposition by the Theil coefficient is applied at global and European levels including estimates of historical development. Additionally, the empirical evidence on the decomposition of inequality in a number of countries is reviewed, regional inequality for 46 countries is estimated, and a simple method of cross-country classification according to relative importance of spatial dimension of inequality is provided.
Spatial inequalities and regional development
1979
In September 1977 a 'Regional Science Symposium' was held at the Faculty of Economics of the University of Groningen in the Netherlands. Organized because of the recent establishment at the Faculty of Economics of a group that is engaged in teaching and research in the field of regional science, the aim of the symposium was to make university members more familiar with regional science and to introduce the newlycreated group to the national and international scene. Two separate topics were selected, of potential interest to both researchers and policy-makers. The first, spatial inequalities and regional development, was chosen because of its central place in regional science. Authors from several disciplines were asked to approach this theme from a general, policyorientated point of view. This ensured the enlightenment of the various dimensions of spatial inequality and its implications for regional policy. The results have been collected in the volume Spatial Inequalities and Regional Development. The second theme focused on spatial statistical analysis. This branch of statistics is a relatively new one which receives growing attention among researchers in the field of applied regional science. The meeting on this topic concentrated on new results of research on the use of appropriate statistical and econometric methods for analyzing spatial data. The papers concerned have been collected into another volume, Exploratory and Explanatory Statistical Analysis of Spatial Data. Both volumes contain mainly papers presented at the symposium. Some additional papers have been included to improve the consistency of the volumes. All contributions have been revised before final publication. In this process critical remarks made by invited discussants at the symposium proved to be very helpful. We believe that these efforts have helped considerably to improve the quality of both volumes.
Spatial Analysis of Income Inequality, Poverty and Economic Growth in the Euro-Med Zone
2009
There is an extensive literature on the impact of inequality and poverty on economic growth and vice versa. However, the triangle relationship among these three variables can be debatable. Income inequality is generally seen to affect long-term economic growth, although there is no consensus on the direction of the effect. Also, based to Kuznets hypothesis, inequality is affected by growth and this is a u-inverse relation. As well as inequality, poverty is one of the important variables affecting growth, and would be affected by growth. This study tries to consider these relations, interactively. According to the observation types, these relations can be defined through spatial econometric techniques for considering neighboring effects. For this purpose, we analyze spatial relations between poverty, income inequality and economic growth in Euro-Mediterranean countries. The results show that growth and inequality have spatial dependence and neighbors of each country can influence its...
Employment Growth and Income Inequality: Accounting for Spatial and Sectoral Differences
2009
Abstract: This paper revisits the inequality-growth relationship accounting for sectoral differences and focusing on US counties. For 8 two-digit industries of the NAICS classification, we estimated a conditional growth model where employment growth depends on regional income inequality and a number of control variables. Spatial econometrics techniques are used to account for spatial dependence.
This paper revisits the inequality-growth relationship using data at the sub-national (provincial) level in the Philippines over the period 1991-2000. A conditional convergence growth model is considered where the growth of per capita income depends on inequality and other growth factors. The contribution of each province to the overall inequality obtained from the Theil index is considered. Results indicate that inequality has a positive and significant effect on per capita income growth. However, the magnitude of the inequality effect is not stable across regions. Geographically Weighted Regression estimates show that the magnitude of the inequality growth relationship varies over a range of 0.72 to 3.36. Other results are also noteworthy in this study. Per capita income grows faster in provinces that contribute more to the overall inequality. Provinces with higher poverty incidence tend to grow less and human capital appears to be a significant booster to per capita income growth. Additionally, urban provinces tend to grow faster than the rural ones.