Regional Income Differences Research Articles

The Widening Role of the Digital Economy on Regional Income Differences - Evidence from the National Pilot Zone for Innovative Development of the Digital Economy

A growing body of research suggests that the digital economy may create opportunities to combat income inequality. However, these studies have focused more on the difference between countryside and city areas, neglecting the intervene of the state, regional differences and labour market in digital economy. Therefore, this paper collects data on the average income of different cities and the average wage of their digital economy workforce, and uses the Theil Index, DID and mediated-effects methods to study the setup of the National Pilot Zone for the Innovative Development of the Digital Economy as well as the status of income equality within the pilot zone. The paper also analyses heterogeneity based on geographic location, and uses a mediation effect model to measure the role of the income of digital economy practitioners in the impact of the National Pilot Zone for the Innovative Development of the Digital Economy on inter-regional income disparities. Study finds that the pilot zone widens the inter-regional income gap. This result is caused by the uneven spatial distribution between regions and industries. Labour wages in the relevant industries are also an important factor mediating the effect between developing the digital economy and the elimination of income inequality.

Information frictions, belief updating and internal migration: Evidence from Ghana and Uganda

Information frictions about benefits of migration can lead to inefficient migration choices. We study the effects of randomly assigned information treatments concerning regional income differentials in Ghana and Uganda to explore participants’ belief updating and changes in internal migration intentions, destination preferences, and actual migration. Treated participants prefer higher income destinations, while effects on intent plausibly follow subjects’ initial under- or overestimation of potential gains, with asymmetric updating propensities. Effects persist for 18 months, and discussions with others about migrating increase, but actual migration does not. Knowledge about income affects intentions and destination choices, but barriers to actual relocation are complex.

The impact of industrial labour productivity on regional income differences in China

Since China’s reform and opening up, the eastern coastal areas have taken the lead in development, and formed significant regional development differences. One of the major reasons for the differences is the significant differences in industrial labour productivity between different regions. The purpose of this report is to examine the impact of industrial labour productivity on regional income differences, clarify its impact mechanism, and provide recommendations for regional coordinated development. This report adopted a combination of quantitative and qualitative analysis. It used a regression model to examine the impact of industrial labour productivity on regional income differences in China, and made qualitative analysis to explain the impact mechanism. Through relevant analysis, this report mainly concluded three findings. Firstly, there are significant differences in industrial labour productivity between regions in China. Secondly, industrial labour productivity is proved to be an important factor affecting regional income differences in China. Thirdly, the Chinese government needs to narrow the gap in regional industrial labour productivity from multiple aspects, such as increasing human capital, strengthening technological innovation, optimising the market and institutional environ-ment, improving the incentive mechanism, etc. The research significance of this report lies in verifying the impact of China’s industrial labour productivity on regional income differences, and deeply analysing its impact mechanism. This has important policy implications for narrowing regional income differences in China.

It’s not me, it’s you: internal migration and local wages in Great Britain

ABSTRACT Differences in regional incomes are large and persistent in many countries. On the one hand, internal migration from low- to high-income regions might eradicate these differences over time. On the other hand, internal migration might exacerbate disparities, as receiving regions benefit from incoming skills and agglomeration economies. This paper estimates the effect of internal in- and out-migration on the earnings of employees who do not move, using a panel of employee records from Great Britain between 2004 and 2018. Employees are tracked and identified as internal migrants if they start working in a new travel-to-work area (TTWA), representing functional labour market areas. The share of in- and out-migrants is significantly correlated with earnings and earnings growth of non-migrants in a TTWA. The results show that in-migrants have an immediate negative effect on local earnings of non-migrants. After three years, in-migration is positively correlated with earnings growth. These effects are exclusively driven by urban areas. Out-migrants have no significant effects. The results provide some evidence that labour mobility can be used as a tool to encourage local growth, albeit with significant adjustment costs.

Dimensions and dynamics of spatial wage inequality in Seoul, 2006 to 2018

ABSTRACT This study analysed the dimensions and patterns of spatial wage income inequality in Seoul from 2006 to 2018. A Theil decomposition was applied to National Health Insurance Service administrative big data of all Seoul residents. Three distinct dimensions of spatial wage inequality (‘regional wage income differences’, ‘within-regions income inequality’ and ‘between-regions income inequality’) were confirmed using factor analysis. A subsequent cluster analysis identified four major district patterns of wage inequality evolutions, including a pattern of triple ‘highs’ and another of triple ‘lows’ of average wage income, within-low-level administrative areas (dongs) inequality and between-dongs inequality. These dimensions and dynamic patterns of spatial income inequality in Seoul were interlinked and they co-evolved with the development of the city and community development policies.

Analyzing Express Revenue Spatial Association Network’s Characteristics and Effects: A Case Study of 31 Provinces in China

In recent years, China’s express delivery industry has experienced significant regional differences in income, which may endanger the sustainable development of the economy and affect the sustainable development of society. To study the development setup and influencing factors of the express delivery industry in various regions of China, based on the income data of provincial express delivery, we constructed a spatial correlation network of provincial express revenue in China using the social network analysis method and analyzed its network characteristics and evolution rules. Additionally, the relationship between network structure parameters and express revenue was tested using the spatial Durbin model. The results reveal that the spatial correlation network of China’s provincial express revenue changes from decentralization to agglomeration, and the connection between the express industry in each province is constantly strengthened. The provinces in the eastern coastal areas exhibit a higher degree of centrality and effective scale in the network, and the limit system is smaller, which indicates that these provinces have higher importance and control ability in the network. Simultaneously, a moderating effect exists between network structure parameters and express income, indicating that network structure parameters affect express income through human capital input. This study provides theoretical research and empirical support to promote the coordinated and sustainable development of the express delivery industry.

Taxation-Based Indicators as a Measure of Income Inequality in Russian Regions

Russia is one of the most unequal of the world’s major economies, with its wealth and income inequalities having drastically increased in recent years. This study aims to describe the influence of the flat personal income tax on income inequality in Russia and its regional characteristics by analyzing per capita tax revenues. The hypothesis is that the system of income taxation that existed in Russia until 2021 did not help reduce income inequality but on the contrary, exacerbated it, which is particularly evident on the regional level. Methodologically, the article relies on statistical analysis of concentration indices, time series analysis, index method, and comparative analysis. The calculations were made with the help of the Analysis ToolPack in MS Excel by using the data on 85 Russian regions. To test the hypothesis, 7 indicators were calculated: the range of variation, standard deviation, coefficient of variation, decile ratio of funds, decile ratio of differentiation, quintile ratio of funds, and the Gini index for 85 Russian regions for the period from 2006 to 2020. In the given period, these indicators remained steadily at a high level with a slight decrease in 2008–2010. Judging by the dynamics of the Gini index calculated by Rosstat, income inequality tended to decline although there were no significant changes in the regional differences in income while regional inequality also remained high. Monetary income and gross regional product are distributed more evenly across Russian regions in comparison with the personal income tax revenues and tax revenues in general of the regional governments’ consolidated budgets. The findings confirm the hypothesis and show that the personal income tax, which is an essential element of the tax system, exacerbated the situation of inequality in Russian regions. These findings can be of use to policy-makers and contribute to further research on taxation instruments and their potential to reduce or mitigate inequality.

Climato-Economic Context of Regional Crime and Corruption Across the Russian Federation

Cross-national research claims that the crime-and-corruption gap between relatively poor and relatively rich countries is larger in more demanding climates that require more cash and capital to cope with the climate. However, this claim is premature because countries differ in many confounding ways including histories and politics. We, therefore, re-tested the climato-economic context of violent crime and corruption within Russia, a country with considerable regional differences in climate and income. Across the eighty-five administrative units of Russia, the crime-and-corruption gap between relatively poor and relatively rich regions is smaller in more demanding climates. Harsher climates are so strongly associated with higher crime levels that the potential influence of differences in wealth becomes negligible. Furthermore, harsher climates are so strongly associated with higher corruption rates in poorer regions but lower corruption rates in richer regions that the potential influence of the climatic demands as such becomes negligible.

Regional inequality and labour precariousness: An empirical regional analysis for Brazil, Mexico and Equador

In this paper, we propose an index and a spatial panel model to measure the impact of precariousness on income inequalities at the subnational level in Brazil, Ecuador and Mexico. Using microdata from Household Surveys of each country, we estimate spatial panel models to capture the effects of labour precariousness on the regional income differences relative to the leader region of each country. The results show a link between regional inequalities and labour market performance indicators related to living and labour market conditions.

It's the Way People Move! Labour Migration as an Adjustment Device in Russia

This paper aims to assess the role of migration as an adjustment mechanism device to favor convergence across states and regions of Russia. In contrast to previous studies, we use variations in the population of a region as a proxy of its net migration rate and apply spatial econometric methodology in order to distinguish the effect from the neighbouring regions. We provide descriptive statistical evidence showing that Russia has more/less/the same intense migration flows than the USA and EU. The econometric analysis shows that migration flows are sensitive to both regional income and regional unemployment differentials. Nonetheless, we find that internal migration is sensitive to regional unemployment and income differentials of neighbouring regions. Dependent on the welfare, pre- or after-crisis period, income in neighbouring regions can create out- or in-migration flows. The relatively high degree of internal mobility coupled with the low sensitivity of migration flows to the local unemployment rate of distant regions might explain why migration flows tends not to generate convergence, but rather divergence across Russian regions.

The Geography of Italian Income Inequality: Recent Trends and the Role of Employment

We reassess the role of regional imbalances in explaining the high household income inequality in Italy. In the first part of the work we use the Survey of Household Income and Wealth (SHIW) to describe the trends in income inequality between and within areas since the early 2000s. We illustrate that the between-area inequality has been relatively stable, while the within-area component increased significantly after the recession and during the recovery. In 2016, the large geographical divide and the higher inequality within the South contributed to almost one fifth of national inequality. In the second part we show that the distribution of employment is key in explaining the regional differences in both average income and its dispersion. By means of simulations based on matching and reweighting, we estimate that national inequality would be reduced by 15 per cent if the distribution of work hours across southern households was similar to the one in the more developed Centre-North. Regional employment differentials are so important in determining overall inequality that income dispersion would decline substantially even if this increase in employment was associated with a drop in southern regions’ average wages.

中國人口結構的變化與地區間收入差異-各省分人口結構變化對收入差異的影響-

中國人口結構的變化與地區間收入差異-各省分人口結構變化對收入差異的影響-

One market fits all? Market access and the origins of the Italian north–south divide

ABSTRACTItaly’s economic development since its unification in 1861 has been characterized by extensive regional inequality. Northern regions were the frontrunners of modern industrialization in the late 19th century, while southern regions never closed the gap. New Economic Geography (NEG) proposes market access as the main driver of regional income differentials. But is its effect homogeneous across regions? The NEG hypothesis is here for the first time considered for the north and the south of Italy separately in the period 1871–1911. Following previous work by the author, both domestic and total market potentials are taken into account as possible drivers of regional gross domestic product (GDP) per capita. The results differ for the two macro-areas: in the south, both market potentials have a strong role in determining the levels of GDP per capita, but they do not affect the growth rates from period to period; and in the north, only domestic market potential is significant in both levels and growth rates. These results point to different dynamics at the sub-national level that should be further qualified by extending the analysis from the NUTS-2 to the NUTS-3 level. The policy implication is that market-oriented measures might not be effective for the most disadvantaged regions before other prerequisites for growth are achieved.

Regional Income Differences and their Evolution after EU Accession. The Evidence from Visegrad Countries

Regional Income Differences and their Evolution after EU Accession. The Evidence from Visegrad Countries

The Family Affluence Scale as an Indicator for Socioeconomic Status: Validation on Regional Income Differences in the Czech Republic.

The Health Behaviour in School-Aged Children study (HBSC) uses the Family Affluence Scale (FAS) as a tool to identify the socioeconomic status of children and adolescents. Even though it is now widely applied in research studies, the external criterion validation of FAS has not been verified in terms of objective economic indicators in Central Europe. The aim of this study is to validate FAS in terms of disposable income per capita in 14 Czech administrative regions. Regional differences in the FAS score were analyzed using Pearson correlation and linear regression to measure the dependency of the aggregated mean of the FAS index at the regional level on data from the Czech HSBC survey carried out from April to June 2014 (n = 10,361). The data analysis has shown an overall positive correlation between the FAS index and regional disposable income (R = 0.77, p < 0.01). The regional disposable income per person could explain 59.7% of the variance in the FAS index (p < 0.01). By validating individual items, the authors identified three items with a significant correlation (p < 0.01): number of computers, dishwasher at home, and number of holidays. FAS seems to be a valid instrument to measure adolescents’ socioeconomic status.

Income Level and Income Inequality in the Euro‐Mediterranean Region, C. 14–700

Was the Euro‐Mediterranean region at the time of the Roman Empire and its Western successor states more unequal than the European Union today? We use some scant evidence on personal income distribution within the Empire and differences in average regional incomes to conclude that the Empire was more homogeneous, in terms of regional incomes, than today's EU, and inter‐personal inequality was low. Moreover, income inequality was likely less around year 700 than in Augustus's time. The latter finding contrasts with a view of rising inequality as the Western Roman Empire dissolved.

The impact of European Union accession on regional income convergence within the Visegrad countries

ABSTRACTThe impact of European Union accession on regional income convergence within the Visegrad countries. Regional Studies. This paper applies regional dynamic computable general equilibrium (CGE) models to simulate the growth of regional per-capita income within the Visegrad group of countries. It shows how regional income differentials would evolve in the Czech Republic, Hungary, Poland and Slovakia if they did not join the European Union. We find that all regions would grow at a slower pace without European Union membership and that the European Union structural policies play a key role here. Finally, we prove the impact of accession on the evolution of regional income inequalities, although its magnitude differs significantly between countries.

When Regional Policies Fail: An Evaluation of Indonesia's Integrated Economic Development Zones

Throughout the developing world, many countries have created special economic zones to attract investment and spur industrial growth. In some cases, these zones are designed to promote development in poorer regions with limited market access and lower quality infrastructure, an example of a big push development strategy. In this paper, we study the effects of Indonesia's Integrated Economic Development Zone (KAPET) program. This program provided substantial tax-breaks for firms that locate in certain districts in the Outer Islands of Indonesia, a country with large regional differences in per-capita income and a history of policies to promote inclusive growth. We find that along many dimensions, KAPET districts experienced no better development outcomes, and in some cases fared even worse, than their non-treated counterparts. If anything, the strongest finding is that firms in KAPET districts paid lower taxes, but these tax reductions neither encouraged greater firm entry, increased migration, nor raised local measures of output or welfare. Overall, the KAPET program does not appear to have achieved the intended outcome of promoting growth in lagging regions. While there are many possible reasons that the KAPET program failed, our findings suggest caution in spending scarce resources to subsidize development in lagging regions.

Regional inequality, convergence, and its determinants – A view from outer space

This paper provides a new dataset of regional income inequalities within countries based on satellite nighttime light data. First, we empirically study the relationship between luminosity data and regional incomes for those countries for which regional income data are available. Second, we use our estimation results for an out-of-sample prediction of regional incomes based on the luminosity data. These results enable us to investigate regional income differentials in developing countries that lack official income data. Third, we calculate commonly used measures of regional inequality within countries based on predicted incomes. An investigation of changes in the dispersion of regional incomes over time reveals that approximately 67–70% of all countries experience sigma-convergence. Forth, we study different major determinants of within-country changes in inequality, i.e., the determinants of the convergence process. We find evidence for an N-shaped relationship between development and regional inequality. Resources, mobility, trade openness, aid, federalism and human capital are also very important.

National income taxation and the geographic distribution of population

We study how different national taxation schemes interact with geographic variation in productivity and consumption amenities in determining regional populations. A neoclassical migration equilibrium model is used to analyze the current nominal income tax system in Norway. The analysis is based on estimated regional income differences accounting for both observable and unobservable individual characteristics and the value of experience. Given regional differences in incomes and housing prices, quality of life and productivity are calibrated to model equilibrium. Compared to an undistorted equilibrium with lump-sum taxation, nominal income taxation creates a disincentive to locate in productive high-income regions. The deadweight loss due to locational inefficiencies is 0.18% of gross domestic product (GDP). We study real income taxation and equal real taxes as alternative tax systems. Both alternatives generate a geographic distribution of the population closer to the undistorted equilibrium, and hence with lower deadweight loss. In an extension of the analysis, we take into account payroll taxes. The existing regionally differentiated payroll taxes to the disadvantage of cities generate a deadweight loss of 0.22% of GDP in an economy with lump-sum income taxation. The two distortionary taxes interact and strengthen each other and the combined distortionary effect of income and payroll taxation in the Norwegian system is 0.46% of GDP.