Regional Income Disparities Research Articles

Analysis of Spatial Spillover Effects of Digital Inclusive Finance on Urban-Rural Income Gap

This article mainly analyzes the changes in urban-rural disparities under digital inclusive finance, which can be divided into three levels of research objectives, gradually and layer by layer. Firstly, based on the theoretical foundation of accelerating the development of rural financial markets and reducing economic disparities between rural and urban areas through digital inclusive finance, a panel threshold model is constructed to quantitatively analyze the threshold effect of digital inclusive finance on the urban-rural income gap, and to study how to reduce the threshold effect and narrow the digital divide between rural and urban areas; Secondly, from the perspective of spatial spillover, this study examines the positive or negative spatial spillover effects of digital inclusive finance on regional urban-rural income disparities, in order to analyze the direction of the impact of digital inclusive finance on urban-rural income disparities. Using the Spatial Panel Lag Model (SAR) and Spatial Durbin Model (SDM) to empirically test their inherent correlation and impact; Thirdly, there are differences in policies and resource allocation among provinces and cities, as well as differences in urban-rural income disparities in different regions. Based on this, a quantitative analysis model is constructed to analyze the path and methods of digital inclusive finance promoting urban-rural income disparities.

European highways and the geographic diffusion of economic activities from agglomerations to less urbanised areas

This paper analyses the impact of highways on the distribution of economic activities between urban agglomerations and peripheral regions in the European Union. In doing so, I use an empirical strategy based on the land use theory employing disaggregated economic and infrastructure data. To address endogeneity, I apply an IV strategy exploiting non-local highway construction as a source of exogenous variation. I find that highways contribute to the diffusion of urban economic activities into surrounding areas, reducing the income gap between European agglomerations and peripheries. Reduced-form estimations suggest that the gap would have been nearly 3% higher in 2020 if the highway networks of European countries had remained at the level of 1990. The study concludes that transportation infrastructure policies can alleviate regional income disparities, increasing economic convergence between urbanised and less urbanised areas.

Accounting for changes in income inequality in China, 2002–2018: evidence from household survey data

This paper examines causes behind recent changes in income inequality in China, especially its moderation since 2008, using household survey data and decomposition analyses. It is found that, by income sources, contributors to the moderation in inequality were wage income, pension, and other transfers, offset somewhat by the inequality‐increasing effect of changes in net farm and nonfarm business incomes, net asset income, imputed rent, and personal income tax and social security contribution. By household characteristics, contributors to inequality moderation were a narrowing in the urban–rural income gap, rural–urban migration, and a decline in regional income disparity, offset by widening inter‐industry earning differentials, a rise in the education premium, and changes in some unknown factors. These results are likely an outcome of some fundamental drivers working together, including processes of catch‐up growth and structural transformation, market‐driven forces including technological progress and globalisation, government policy actions, and remaining market distortions.

Temporary Immigration and Regional Income Inequalities in Times of COVID-19. A Spatial Panel Data Analysis

Abstract Confronted with ageing and depopulation, Romania needs to identify the main factors that attract immigrant population. This paper tackles the matter of regional income disparities as a key factor for temporary immigration in Romania. The quantitative approach includes a spatial panel data analysis based on a dataset retrieved from the Romanian National Institute of Statistics and our data consists of 378 observations on 42 counties in Romania over a time span of nine years starting with the year 2012. Our findings suggest that temporary immigration in Romania is shaped by location, but does not follow the labour market characteristics. Higher salaries and job opportunities are not the main factors of attraction to temporary immigration and it does not seem to be influenced by regional disparities.

Regional income divergence and economic development in Africa: is Kuznets right?

ABSTRACT This paper studies the relationship between economic development and within-country income inequality using satellite night-light data for a panel of 49 African countries. We highlight three worrisome facts describing regional income disparities in Africa, which rank among the highest in the world, they are persistent, and they have increased 2.16% annually over the period 1992–2012. Our instrumental variable (IV) results confirm the existence of a regional Kuznets curve characterized by an inverted U curve, implying that although economic progress increases regional income inequalities at first, this positive link eventually flats out at a certain level of GDP per capita (2200 constant USD) and turns to reduce income inequality as further as GDP per capita still increases. We also find that the positive impact of total trade on regional income inequalities disappears once we account for potential endogeneity issues. Aid flows, FDI, industry, oil rents, government share, and institutions present positive correlations and reinforce our main results. Our conclusions should raise the concern for policymakers and economists to enhance policies towards a more prosperous, inclusive, and sustainable economic future in Africa, especially in the least developed countries.

Regional variation in the GDP per capita of colonial Indonesia, 1870–1930

Since colonial times, substantial regional income disparities have been reported for Indonesia. However, in spite of a wide variety of available data and indicators, so far published data on Indonesian per capita GDP in colonial times are limited to macro-estimates for the entire archipelago or are confined either to Java or to the Outer Islands. In this paper we provide a first attempt to arrive at estimates of diverging income and living standards at a regional level. We implement the Geary and Stark method on a large body of data collected by the colonial government, to estimate GDP for ten macro-regions and five benchmark years between 1870 and 1930. Our findings, corrected for prices, confirm the image arising from the existing literature of major divergences within the Indonesian archipelago in general, and of a higher per capita GDP in most of the Outer Islands (all islands of the Indonesian archipelago except for Java and Madura) compared with Java in particular. This was definitely the case in 1870 and still the case in 1920, but the picture is less clear for 1930, which was the final year before Indonesia’s commodity exports started to collapse.

Analisis Ketimpangan Pembangunan Ekonomi Antar Kabupaten/Kota Di Provinsi Jambi

Economic growth of districts in Jambi Province during the period 20042013 varied enough. This indicate that there are the disparities economic development between regions. This research aims to analyze disparities economic development in terms of regional income disparities and how the correlation between economic growth and the disparities of economic development during the period 2004-2013. The analysis used Williamson Index and Pearson Correlation as the instrument. From the research note that economic development disparities between districts in Jambi Province are moderate and correlations between economic growth and the disparities of economic development are weak and negative. To reduce disparities of economic development occuring need the strategic policies of the regional development for all of regions.

Has Globalization Mitigated Regional Income Inequality? : Evidence from Korea

Purpose This study aims to analyze the effect of globalization on alleviating income inequality in Korea by applying the variables of GRDP per capita, FDI, Trade Openness, and Human Capital during the period of 1998-2017 at regional level, not at the national level. Design/Methodology/Approach This study has applied the quantile regression model to analyze the heterogeneous effects of regions with notably large or small regional income disparity, not an OLS model that analyzes the average influence of globalization on the income inequality between regions. Findings The results of this study are as follows. First, the relationship between regional growth and income inequality in Korea’s globalization existed in parallel with Kuznets hypothesis and Baro’s hypothesis. Next, exogenous factors such as FDI and Trade Openness showed the effect of softening the income gap only for some income quintiles in specific regions. Finally, human capital served as a factor that exacerbated income inequality, excluding some income quintiles of the southeastern region. Research Implications The regional income gap should be alleviated by not only expanding the market value but also creating new regional demand by discovering industries with a large ripple effect from globalization and items with a comparative advantage, and fostering high-skilled labor that can absorb externalities.

Regional convergence and spatial dependence in Thailand: global and local assessments

This article studies the evolution of per-capita income disparities and spatial dependence across 77 provinces of Thailand over the period 1995–2017. Results show that – on average – regional income disparities are decreasing over time and initially poor provinces are catching up with rich provinces, indicating the presence of sigma and beta convergence. However, when we study the evolution of disparities – beyond the average – we reject the hypothesis that all provinces would eventually converge to a common long-run equilibrium. The evolution of these disparities suggests the existence of three local equilibria or convergence clubs. Further analyses based on global and local indicators of spatial association reveal significant spatial dependence in the evolution of disparities and the location of the convergence clubs. This article concludes arguing that an excessive focus on global or average assessments can be incomplete, and that spatial dependence has played a significant role in the formation of local convergence clubs. Furthermore, as different clubs may need different policy treatments, there is no one-size-fits-all territorial policy for reducing regional disparities in Thailand.

Convergence effect of the Belt and Road Initiative on income disparity: evidence from China

The international economic effects of the Belt and Road Initiative (BRI) have received much attention, but few studies have focused on the impact of the BRI on domestic regional income disparities. Here, a theoretical framework is proposed based on the logic of public policy analysis in economic geography aiming at studying the impact of the BRI on the convergence of inter-city income disparities in China. Specifically, taking the BRI as a quasi-natural experiment, the impact of the BRI on the convergence of inter-city income disparities in 26 provinces of China is studied empirically using the difference-in-differences method. We find that the BRI has indeed contributed to the convergence of regional income disparities, and this convergence effect is continuously dynamic in its nature. The effects of trade opening and industrial structure transformation are the paths through which the BRI contributes to the convergence of income disparities. Furthermore, we find that there is significant heterogeneity in the effects of the BRI on the convergence of income disparities among cities in different provinces in China. The convergence effect of the BRI on the income disparities among cities in East China is small and insignificant, whereas it can significantly reduce the income disparities among cities in Central and West China. The research in this article has important application value for exploration of the regional income distribution effect of the BRI.

Regional polarization in Turkey

AbstractIn this study using household data, we aim to track the trends in regional income polarization in Turkey and focus on the extent of and trends in regional income disparity. With the help of classical and newly developed indexes and decomposition methodologies, we estimate the polarization level, temporal trends and the decomposition within and between regions of the western and eastern regions in Turkey. We also analysed the impact of being in the east or in the west on income polarization, controlling for other individual and household characteristics. To shed more light on the underlying mechanisms behind the polarization between two regions, we performed an ordered logit regression.

How is the Income Disparity in the Context of North Sumatera Province: A Conceptual Framework

The dynamics of regional income has attracted the attention of practitioners, scholars and academics. A critical issue in development for the past and current decades is the disparity or inequality of income distribution among regions. The disparity of income distribution, in this case, refers to the convergence theory of the Solow-Swan model developed by Barro and Sala-i-Martin. Accordingly, the study will identify and analyse several prepositions. The contribution of this work for the next step will provide an additional wealth of knowledge in regional economics and regional development, especially with regard to the convergence of regional income disparities. This study also will contribute to the local governments to accelerate the convergence of income disparities in the Province of North Sumatera. Later, the authors' work will provide input to local governments on the variables that converge or diverge in the process of income disparity convergence so that recommendations can be taken based on the estimated study results.

The impact of industrial development zones designation on the convergence of economic growth in East Java

ABSTRACT Since 2008, the strategy to concentrate industrial areas in eight regions in East Java has rapidly accelerated economic growth. However, this strategy also increases regional income disparity. Therefore in the last 2019, Indonesian government design a policy through Presidential Decree No.80/2019 to develop additional industrial centres of East Java into sixteen regions. The main objectives of the policy are to improve regional disparities and to maintain high economic growth. Based on this condition, this study aims to evaluate whether this policy can reduce regional income disparities in East Java. This study modifies the Barro-Martin convergence model to assess the new policy. The model is estimated using panel data of 38 regions in East Java from 2010–2019. There are two results in this study; first, the industrial sector can accelerate economic growth; and second, the additional industrial centres policy tends to improve regional income disparity in East Java.

Globalization and spatial inequality: Does economic integration affect regional disparities?

This article examines the link between economic globalization and spatial inequality in a panel of 142 countries over the period 1992–2012. Our instrumental variables estimates reveal a strong causal effect of the degree of economic integration with the rest of the world on spatial inequality, indicating that the advances in the process of globalization currently underway contribute to significantly increasing regional income disparities. This means that globalization leads to the emergence of losing and winning regions within countries and that the group of losing (winning) regions tends to be made up of low (high-)-income regions. This result has to do with the regressive spatial impact of actual economic flows, while existing restrictions on trade and capital do not exert a significant effect in this context. Our findings are robust to the inclusion in the analysis of different covariates that may be correlated with both spatial inequality and globalization and are not driven by a specific group of influential countries. Likewise, the observed relationship between economic integration and spatial inequality does not depend on the measures used to quantify the magnitude of regional income disparities within the various countries. At the same time, our estimates suggest that the spatial impact of globalization is contingent on the level of economic development.

Economic resiliency and recovery, lessons from the financial crisis for the COVID-19 pandemic: A regional perspective from Central and Eastern Europe

In this paper we examine resiliency, the ability to absorb and recover from economic shocks, in 199 Nuts-3 regions in Central and Eastern Europe (CEE) following the 2008 global financial crisis. We find evidence of strong positive regional spillovers, meaning that regions tend to form clusters of high-performing and low-performing areas, a process that exacerbates regional income disparities. Using the experience of the recovery from the 2008 financial crisis, we simulate the effects of the COVID-19 pandemic on the ability of these, and, by extension, other upper-middle-income countries to recover from a shock to employment caused by the incidence of COVID-19. Using our recoverability equation estimates, we find that employment in no more than 31 of the 199 regions will have fully recovered in 2 years after the onset of the recovery from the crisis. Policy implications of the findings are discussed.

Regional Income Disparities, Monopoly & Finance

Many of the most prosperous places in the U.S. are hotbeds of technology and also the home bases of companies which exercise monopoly power across much larger territories – nationally, or even globally. This paper makes four arguments about regional income disparities. First, monopoly, and the market for new prospective monopolies amplifies agglomeration economies, making locations invincible and inimitable. Second, the taxes imposed by the monopoly firms on a wide range of economic activity, together with the restrictions they are able to impose on the dissemination and use of technology, further inhibit local economic development in other places. Third, financialization – the power of the financial sector over both firms which are receiving financing and firms which are paying cash out – serves to feed these spatially concentrated monopolies at the expense of other places and industries. Finally, we conclude that the most efforts at local economic development would be best furthered by breaking up the concentrated economic power of technology and finance.

재정분권이 지역 간 소득격차와 재정효율성에 미치는 영향 분석

본 연구는 정부에서 추진하고 있는 재정분권화 정책이 지역 간 소득격차와 재정효율성에 미치는 영향을 분석하고, 그 정책적 시사점을 마련하는 데 그 의의가 있다. 본 연구에서는 전국 17개 광역자치단체를 대상으로 2011년부터 2017년까지 재정분권과 지역 간 소득격차 간의 관계를 고정효과모형을 활용하여 패널분석 실시하였다.<BR> 분석결과, 재정분권은 지역 간 소득격차에 부의 영향을 미치는 것으로 나타나 재정분권화 정책은 지역 간 소득수렴에 긍정적인 효과를 가지는 것으로 나타났고, 더 나아가 재정분권과 재정효율성의 관계 또한 세입분권과 세출분권 모두 재정효율성에 정의 영향을 미치는 것으로 분석되었다. 이에 본 연구에서는 정책적 시사점으로 지방정부가 갖는 지방세입 상의 자율성을 중심으로 한 국세의 지방세 이양 등과 같은 자주재원 확충과 실질적 의미에서의 과세자주권 확대 그리고 지방정부의 재정자율권을 강화하기 위한 기채자주권의 제고를 제안하였다.

Income disparities in Colombia: market potential and neighborhood effects

ABSTRACT Market potential has been shown to have an important impact on the explanation of observed income disparities both across countries and across regions within countries. However, the importance of neighbourhood for ‘income levels-market potential’ regressions is largely neglected in the empirical studies on the subject. This paper tries to fill up this gap by estimating fixed effects spatial panel data models using Colombian regional data over the period 1990–2015. Our results reveal that around half of the impact of market potential on regional income disparities can be attributed to neighbouring regions.

Fiscal Decentralization, Corruption, and Income Inequality: Evidence from Vietnam

The objective of this research paper is to study the simultaneous relationship between fiscal decentralization, corruption, and income inequality among Vietnamese provinces. We use a balanced panel data set of 63 provinces/cities in Vietnam in the period from 2011 to 2018. The study used 3SLS-GMM (Three Stage Least Squares - Generalized Method of Moments estimator) and GMM-HAC (Generalized Method of Moments - Heteroskedastic and Autocorrelation Consistent estimator). Empirical evidence shows a strong simultaneous relationship: increased corruption will increase regional income disparities, income inequality, and increase fiscal decentralization. In addition, the results also suggest that an increase in per-capita income will reduce the level of corruption, or better control corruption of each province. The degree of increase in income inequality, which reduces fiscal decentralization, is the same for trade liberalization. All demonstrate that there is a simultaneous relationship between fiscal decentralization, corruption, and income inequality. In a region of high public governance quality, fiscal decentralization positively effects its economic growth. This issue will indirectly increase income inequality between provinces within a country. Our findings imply that a country’s fiscal decentralization strategy should be linked to improving corruption control and local governance effectiveness, indirectly improving income inequality between localities or regions.

Diferencias regionales en el ingreso laboral y el papel de la educación, informalidad laboral y el sector público. El caso de Ecuador

El artículo analiza la importancia de la educación, la informalidad laboral y el trabajo público para explicar las brechas de ingreso laboral entre provincias del Ecuador. Para ello se utilizan microdatos de encuestas laborales de 2017, y se emplean métodos de descomposición basados en regresiones de función de influencia recentrada. Se encuentran marcadas diferencias regionales en términos de ingreso laboral. Los resultados de la descomposición indican que la educación es la variable más importante que explica las diferencias de ingreso laboral entre las provincias. El análisis también muestra que una parte significativa de las disparidades regionales de ingreso laboral responden a la informalidad laboral y al empleo público.