Regional Income Inequality Research Articles

Towards a double bell theory of regional disparities

AbstractDespite the large attention given to regional disparities, a conceptual framework simultaneously linking the inter- and intra-regional development processes over time is still missing. A vast set of empirical analyses on their trends indeed exists. In most cases, it witnesses the presence of the famous Williamson’s inverted U-shaped relation between GDP per capita and regional income inequalities, and of its augmented shape where the inverted U turns upward again at later stages of development. The paper has the aim to present a conceptual framework on the interlinkages between inter- and intra-regional disparity trends, highlighting the influence that one exerts over the other. It does so claiming that their joint analysis can provide an explanation of situations “against conventional wisdom” and can overcome the simplistic idea that if inter-regional convergence occurs, social equity is achieved. Empirical evidence is provided in the case of European regions. The paper has a normative value, in that an interpretation of the concurrent inequality trends at different levels can lead to more efficient normative interventions, avoiding misallocation of financial resources at sub-regional level.

PENGARUH PERTUMBUHAN EKONOMI, PENDIDIKAN, DESENTRALISASI FISKAL, DAN BELANJA MODAL TERHADAP KETIMPANGAN PENDAPATAN

Despite the major economic contribution of Java, some economic problems persist; one of which is income inequality in five regencies and cities in the Special Region of Yogyakarta. The objective of this research is to examine the effects of economic growth, education, degree of fiscal decentralization, and capital expenditures on income inequality in the Special Region of Yogyakarta during the 2011-2021 period. The results of the analysis using panel data regression with Common Effect Model indicate that education and degree of fiscal decentralization significantly affect income inequality in the Special Region of Yogyakarta during the 2011-2021 period, while economic growth and capital expenditures have no significant impact on the income inequality in the said region during the aforementioned period.

Impact of e-commerce on income inequality: evidence from rural China based on cross-county panel data

ABSTRACT Although information and communications technologies (ICTs) are developing rapidly worldwide, evidence of the relationship between e-commerce and regional income inequality in the rural areas of a developing country remains scarce. Using original cross-county panel data, this study investigates the impact of e-commerce on regional income inequality in rural China, taking into consideration endogeneity issues. The results indicate that e-commerce may increase income inequality in developed counties but reduce income inequality in the less-developed counties; however, the total effect of e-commerce on overall income inequality is insignificant. The decomposition results show that differences in e-commerce accessibility contribute to widening the income inequality between developed and less-developed counties. In contrast, the differences in the income returns of e-commerce usage contribute to reducing income inequality. The empirical results suggest that a policy promoting e-commerce development may reduce income inequality in less-developed regions.

Shadow economy-income inequality nexus: a panel analysis of West African countries

ABSTRACT This paper examines the nexus between shadow economy and income inequality in the West African region. The study applies second-generation panel estimation techniques to analyze the effect and the direction of causation between the variables. The results reveal that the shadow economy reduces income inequality in the region in both short-run and long-run estimations. A similar result is documented when alternative estimation techniques are employed. In addition, the panel causality results show a bidirectional relationship between shadow economy and income inequality in the West African economy. The implications of the study are discussed.

Sustainable Maize Storage Technology Adoption in Ghana: Implications for Postharvest Losses, Farm Income, and Income Inequality

ABSTRACTThe Purdue Improved Crop Storage (PICS) bag, a sustainable post‐harvest storage technology, can address the high postharvest losses that are a major threat to economic development, food security and the environment in Africa. However, there is limited empirical research on this technology. This study therefore aims to fill this knowledge gap by analysing the factors influencing the diffusion and adoption rates of PICS bags and estimates the impact of the technology adoption on postharvest losses, farm income and income inequality in the Ashanti region of Ghana. The results show that less than 20% of farmers adopt the PICS bag, suggesting low adoption despite the widespread exposure of 51.75%. The technology adoption rate could be increased by 20% if all the farmers were exposed to it. It reduces postharvest losses by 14.2%–19.1%, increases farm income by 89.7%–91.2% and reduces income inequality by 51.33%. These findings suggest that promoting the technology can stimulate sustainable rural development by improving farmers' welfare.

Does city smartness improve equality? Research on the impact of smart city construction on income inequality

AbstractSmart city construction is an essential practice in the effort to promote the digital transformation of society as a whole. Taking China's ‘National Smart City’ pilot project as a quasi‐natural experiment, this paper studies the income distribution effect of smart city construction by building a differences‐in‐differences model and using the data of China's prefecture‐level cities from 2008 to 2018. The results show that implementing China's ‘National Smart City’ pilot project has significantly reduced regional income inequality. However, this effect has heterogeneity. In regions with a higher level of economic development, human capital accumulation and R&D investment, the impact of smart city construction on reducing income inequality is stronger. In areas with a higher level of human capital accumulation, smart city construction can reduce income inequality. However, this effect is insignificant in areas with a lower level of human capital accumulation. Mechanisms tests show that smart city construction can reduce regional income inequality by creating more jobs, narrowing the digital divide and improving public service delivery. As stated above, this paper implies that accelerating the construction of smart cities and improving the digital and intelligence levels of the wider society is of great significance to reducing income inequality and building a more reasonable income distribution structure.

Is ‘Common Prosperity’ Badly Needed in Mainland China? Evidence on the Variance Convergence of Per-Capita GDP among 31 Cities and Provinces

ABSTRACT This research paper examines the necessity of implementing “common prosperity” in mainland China, as emphasized by Xi Jinping during the 20th Congress of CCP on October 16, 2022. The issue of provincial income divergence remains a challenge to China’s sustainable growth. The new concept of “common prosperity” stresses the requirement of reducing income inequality for the balance of growth and stability in the next development phase of China. This study analyzes regional income inequality and convergence using the club convergence approach. This method offers more precise indications of economic symmetry than traditional unit root tests, enabling clearer policy implications. The empirical analysis reveals that while full cross-provincial variance convergence is unsustainable, the 31 cities and provinces can be grouped based on club variance convergence of the per capita GDP. The past and current public policies could have an impact on the imbalanced convergence, such as “the richer got more” from the fiscal transfers, the hukou system, and the educational and tax justice among cities and provinces.

The impact of inflation on inequality in the CEMAC and UEMOA zones of Sub‐Saharan Africa

AbstractThis paper explores the impact of inflation on income inequality in Sub‐Saharan Africa, over the period from 1997 to 2019. The Bayesian model averaging method, à la De Luca and Magnus (2011), is employed to empirically support the main conclusions. The main finding highlights that inflation has an asymmetrical impact on inequality in the Sub‐Saharan African (SSA) region, diminishing income disparities among the wealthy while exacerbating them among the impoverished. The results are sensitive to the economic characteristics of the country as well as the level of income brackets. Education, health expenditures, size of agriculture, economic development and control of corruption play pivotal roles in modelling the relationship between inflation and income inequality in the SSA region. Social safety net programs, monetary policies aimed at addressing inflation, investments in education, fostering inclusive economic growth, enhancing access to financial services for the impoverished, reforms to advance land rights and promoting regional cooperation should be the primary policy objectives for SSA countries.

Economic complexity and income inequality in Russian regions

Although economic growth leads to a reduction in poverty, the growing income inequality and its possible consequences are of some concern. The level of economic complexity has recently been increasingly viewed as an important predictor of income inequality. In this paper, using pool and models with time fixed effects, the impact of the economic complexity index on income inequality in Russian regions for 2013 and 2015 was estimated. The results of the evaluation of econometric models show that regions with more complex economies showed a higher level of income inequality compared to others. The explanations for the effect obtained include an increase in demand for highly qualified labor as a result of the development of high-tech industries and an increase in wage differentiation between high-skilled and low-skilled workers, as well as the migration of high-skilled workers to economically more complex regions. The main conclusion is that economic complexity is a significant factor of the variation in income inequality and should also be taken into account while conducting economic and social policy in Russian regions.

Dynamic Microsimulations of Regional Income Inequalities in Germany

Dynamic Microsimulations of Regional Income Inequalities in Germany

Correlation between income inequality and economic growth in Russian regions: new results based on the Granger causality test

The issue of income inequality is highly relevant in scientific literature. It is caused both by the population’s pursuit of achieving an acceptable level of social justice specific to a particular society and by the property, which is often attributed to income inequality, to negatively influence economic development and growth. This article conducts an analysis of cause-and-effect relations between income inequality in the Russian regions (measured by the Gini index) and the level of gross regional product (hereinafter referred to as GRP) per capita. The primary research method employed is the Granger causality test. The research is based on data from the Federal State Statistics Service on the socio-economic development of Russian regions. Direct and reversal causality tests were performed, revealing that GRP per capita influences income inequality, but not vice versa. Moreover, the logarithm of GRP per capita exhibits a bidirectional relationship with the Gini index for Russian regions. On the basis of the obtained results, it is concluded that for effective management of the issue of regional income inequality, it is advisable to use indirect methods of financial regulation instead of the direct ones and influence income inequality through indicators of GRP per capita in Russian regions, thereby creating conditions for an increase in the standard of living and average income.

The role of income inequality as an ecological determinant of mental health: A nation-wide multilevel analysis on an Italian sample.

Income inequality, a pivotal determinant of general and mental health, operates through intricate mechanisms at various geographical scales. While established at country or region levels, the impact of lower-level (municipal or neighborhood) inequality remains inconsistent. This study explores the influence of regional- and municipal-level income inequality on individual psychological distress during the COVID-19 pandemic in Italy, employing a multilevel data analysis. In a post hoc analysis of data from the first wave of the pandemic (March to April 2020), three hierarchical levels were considered: individual participants, municipalities, and regions. Depressive and anxiety symptoms were measured using the PHQ-9 and GAD-7 scales, while the Gini coefficient gauged income inequality at municipal and regional levels. The analysis incorporated demographic variables as potential confounders. The study encompassed 21 regions, 3,900 municipalities, and 21,477 subjects. Income inequality at both regional and municipal levels exhibited associations with distress scores, suggesting independent effects. Notably, higher distress scores were identified in southern regions with elevated inequality, despite a more substantial COVID-19 impact in the north. Findings contribute to existing literature by emphasizing the independent impact of lower-level (municipal) and higher-level (regional) income inequality on population psychopathology. The study supports theories suggesting diverse pathways through which inequality at different levels influences health, such as potential associations with healthcare system dysfunction at the regional level and welfare dysfunction at the municipal level. The observed north-south gradient in distress scores highlights the need for psychosocial interventions to alleviate income inequality, especially in historically disadvantaged southern regions. Future research should explore the nuanced interplay between income inequality and various ecological variables to provide a comprehensive understanding of its health impact.

The Relationship between Regional Educational Resource Inequality and Income Inequality: The Case of China

The relationship between intra-regional inequality in educational resources and income inequality has always been the focus of social development and equity issues. Using the education Gini coefficient as the main indicator for portraying educational inequality, this paper selects relevant provincial panel data to study the relationship between inter-regional educational inequality and the widening of the income distribution gap in China, and finds that: 1) China's inter-regional educational inequality is positively correlated with the income distribution gap; 2) Over time, the effects of unequal access to education and widening economic disparities are becoming more pronounced. In order to stop the income gap from expanding due to educational inequality, the government should invest more in education, boost the rate at which educational resources are used, and support the coordinated growth of interregional education. This article fills the research gap on the relationship between educational resources and income in the last decade and contributes to the national education field.

Regional income inequality in Brazil: state-level Distributional National Accounts

PurposeBrazil’s regional inequality is an important topic due to the large and persistent differences in development between states and the high levels of inequality in the country. These variations in development can potentially render survey data inaccurate since the significance of capital income varies across the states. Besides, previous studies incorporating tax and national accounts data globally have mainly focused on measuring the income distribution at the country-level. This approach can limit the understanding of inequality, especially when considering large countries such as Brazil.Design/methodology/approachThe methodology used to construct these estimates follows the guidelines of the Distributional National Accounts, whose core goal is to provide income distribution measures consistent with macroeconomic aggregates and harmonized across countries and time. The procedure has three main steps: first, it corrects the survey’s underrepresentation of top incomes using tax data. Then, it accounts for national income items not included in the survey or tax data, such as imputed rents and undistributed profits. Finally, it ensures that all components match the national income.FindingsCompared to survey-based estimations, the results reveal a new angle on the state-level inequality. This study indicates that Amazonas, Rio de Janeiro and São Paulo have a more concentrated income distribution. The top 1\% of earners in these states receives around 28\% of total pre-tax income, while the top 10\% receive nearly 60\%. On the other end, Amapá (AP), Acre (AC), Rondônia (RO) and Santa Catarina (SC) are the states where the income distribution is less concentrated. There were no significant changes in the income distribution across the states during the period analyzed.Originality/valueThis study combines survey, tax and national accounts data to construct new estimates of Brazil’s state-level income distribution from 2006 to 2019. Previous results only considered income captured in surveys, which usually misses a significant part of capital incomes. This limitation may bias comparisons as capital income has different importance across the states. The new estimates represent the income of top groups more accurately, account for the entire national income and enable to compare regional inequality levels consistently with other countries.

Digital technology, e-commerce, and economic inequality: The case of China

This paper examines economic inequality through digital facilitated e-commerce as a new perspective. Digital development is good for output production, which can attenuate regional income inequality in China. Falling search costs with e-commerce technological progress boost more online search for better price discounts. The resulting increase in spending propensities is higher in remoter, poorer, or smaller regions, so that consumption inequality declines more than income inequality as recently observed in China. This theoretical result is consistent with our empirical finding that China's ratio of income to consumption inequality rises significantly with rapid developments in its e-commerce. Additionally, this ratio is found to decrease under wider economic openness but increase with improved transportation conditions.

Spatial analysis of regional income inequality in EU countries

ABSTRACT This article analyses regional convergence and the diminishing regional disparities within the EU27 from 2000 to 2019. It assesses the impact of income fluctuations on regional inequality by employing secondary analysis of income per capita indicators across NUTS 3 level regions. The article provides a quantitative assessment of regional income inequality, encompassing the most prevalent instruments used in the analysis of inequality data. In particular, it determines EU regional disparities using constructed Theil, Gini and CV indices exposing a more comprehensive evaluation of regional disparities within the EU. It also examines the nexus between spatial effects on regional income inequality. The findings suggest that EU convergence persists at the NUTS 3 level, albeit at a decelerating pace. We also point to the role of clustering effects among neighbouring regions. Notably, the study highlights the diminishing role of regional clustering due to income inequality during the ongoing convergence process.

Manufacturing as a false panacea for regional income inequality

Manufacturing as a false panacea for regional income inequality

The Initial Impacts of the COVID-19 Pandemic on Regional Economies in Indonesia: Structural Changes and Regional Income Inequality

The COVID-19 pandemic has exerted an enormous impact on the Indonesian economy. In 2020, the country’s economy contracted by 2.7%. However, the impact has been spatially heterogeneous. Based on provincial GDP across industrial sectors, this study examines how structural changes caused by the pandemic have affected the determinants of inter-provincial inequality in Indonesia by conducting a bi-dimensional inequality decomposition analysis. According to the bi-dimensional decomposition analysis, after the outbreak of COVID-19, the tourism sector reduced its contribution to inter-provincial inequality. On the other hand, the IC and financial services sectors were not affected by the pandemic and raised their contributions. When Indonesia recovers from the pandemic, it is likely that the tourism sector will regain its position as an important determinant of inter-provincial inequality. However, the most important sectors in determining inter-provincial inequality will be the IC, financial, and business services sectors, particularly in the Java–Bali region. With the rapid advancement of IC, financial, and e-business technologies, the roles of these high-inequality sectors are likely to increase unless policies that could facilitate spatial dispersion of these services and activities are implemented.

Does COVID-19 Exacerbate Regional Income Inequality? Evidence from 20 Provinces of China

The COVID-19 pandemic has had a profound impact on almost all aspects of society and the world’s economy. This study aimed to examine the impact of COVID-19 on regional income inequality in China. Based on provincial data from 20 provinces (covering 218 prefecture-level cities) for the period from 2013 to 2022, the study revealed the significant impact of COVID-19 on widening regional income inequality, using a continuous difference-in-differences (DID) model. The results were robust when applying a parallel trend test, lagging control variables, and alternative measures of regional income inequality to test the results. Additional analysis suggested that the adverse impact of COVID-19 on regional income inequality was increased by regions’ foreign trade dependence and their share in the service industry but may have been weakened by the development of the digital economy. The findings highlight the adverse effects of COVID-19 on regional income inequality.

Regional development disparity and mapping of economic potential in East Nusa Tenggara province

<p>East Nusa Tenggara Province is one of the provinces in Indonesia in the form of an archipelago and geographically borders directly with the State of Timor Leste. This province has a problem with a fairly high poverty rate, in fact it was recorded as the 3rd highest in Indonesia after the provinces of Papua and West Papua. Because it is an archipelagic province, the problems of disparity in regional development, income inequality and poverty cannot be avoided. The existence of this disparity symptom does not only lie in regional development, but this disparity occurs in the income and GDP-forming sectors. Therefore the main goal to be achieved in this research is to identify areas in NTT Province which are still classified as lagging behind, and how to find the economic base sector as a leading sector so that it can be used as a locomotive for regional development so that in turn it is able to reduce regional inequality, income distribution and poverty. The analytical tools used are Theil Entrophy Analysis, Klasen Typology, Location Quintient (LQ) Analysis and Dynamic Location Quintien (DLQ) Analysis. The data needed is secondary data in the form of published documents from the BPS Province of NTT from 2012-2018 for the purposes of analysis such as GRDP data, population and per capita income for each district in the province of NTT. The results of the analysis found that there were 3 regencies that were classified as developed and fast growing, 3 regencies which were categorized as developed but depressed areas.</p>