[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/spr/jahrfr/v35y2015i2p123-146.html
   My bibliography  Save this article

Income inequality in European Regions: Recent trends and determinants

Author

Listed:
  • David Castells-Quintana
  • Raul Ramos
  • Vicente Royuela
Abstract
Income inequality is both at the political and academic agenda. Because of the Great Recession, income inequality has experienced an increase in many parts of the world in general and in many European regions in particular. In addition, several academics have signalled inequality as a source of such crisis. Nevertheless, few attempts have been made for conducting the analysis at the regional level. In this work we analyse the main factors behind current trends in inequality in Europe over the last decade. We develop our analysis at the regional level, which adds a new dimension to the existing literature. Our results point to a large diversity in inequality patterns. Inequality is on average lower in more developed regions, but recent increases in inequality seem associated with economic growth. Our results suggest that tertiary specialisation, openness, and technological change, although likely to be associated with economic growth, are also associated with increasing inequalities. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • David Castells-Quintana & Raul Ramos & Vicente Royuela, 2015. "Income inequality in European Regions: Recent trends and determinants," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 35(2), pages 123-146, October.
    • Handle: RePEc:spr:jahrfr:v:35:y:2015:i:2:p:123-146
    DOI: 10.1007/s10037-015-0098-4
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10037-015-0098-4
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10037-015-0098-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Joseph STIGLITZ, 2013. "The global crisis, social protection and jobs," International Labour Review, International Labour Organization, vol. 152, pages 93-106, January.
    2. Patrick Vanhoudt, 2000. "An assessment of the macroeconomic determinants of inequality," Applied Economics, Taylor & Francis Journals, vol. 32(7), pages 877-883.
    3. Marrero, Gustavo A. & Rodríguez, Juan G., 2013. "Inequality of opportunity and growth," Journal of Development Economics, Elsevier, vol. 104(C), pages 107-122.
    4. Daniel Halter & Manuel Oechslin & Josef Zweimüller, 2014. "Inequality and growth: the neglected time dimension," Journal of Economic Growth, Springer, vol. 19(1), pages 81-104, March.
    5. Andrés Rodríguez‐Pose & Vassilis Tselios, 2009. "Education And Income Inequality In The Regions Of The European Union," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 411-437, August.
    6. Jordi Guilera, 2011. "Extending the Kuznets Curve," Working Papers in Economics 257, Universitat de Barcelona. Espai de Recerca en Economia.
    7. Vassilis Tselios, 2014. "The Granger-causality between income and educational inequality: a spatial cross-regressive VAR framework," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 221-243, August.
    8. Dusan Paredes & Victor Iturra & Marcelo Lufin, 2012. "A further step to understand income inequality in Chile: A decomposition using three-stages nested Theil index decomposition method," Documentos de Trabajo en Economia y Ciencia Regional 25, Universidad Catolica del Norte, Chile, Department of Economics, revised Aug 2012.
    9. Jean-Paul Fitoussi & Francesco Saraceno, 2010. "Inequality and macroeconomic performance," Working Papers hal-01069429, HAL.
    10. Greenwood, Jeremy & Jovanovic, Boyan, 1990. "Financial Development, Growth, and the Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1076-1107, October.
    11. Isabell Koske & Jean-Marc Fournier & Isabelle Wanner, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 2. The Distribution of Labour Income," OECD Economics Department Working Papers 925, OECD Publishing.
    12. Oscar Afonso & Ana Lurdes Albuquerque & Alexandre Almeida, 2013. "Wage inequality determinants in European Union countries," Applied Economics Letters, Taylor & Francis Journals, vol. 20(12), pages 1170-1173, August.
    13. Baltagi, Badi H & Griffin, James M, 1984. "Short and Long Run Effects in Pooled Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(3), pages 631-645, October.
    14. Heather Dickey, 2014. "The Impact Of Migration On Regional Wage Inequality: A Semiparametric Approach," Journal of Regional Science, Wiley Blackwell, vol. 54(5), pages 893-915, November.
    15. James Galbraith & Enrique Garcilazo, 2005. "Pay Inequality in Europe 1995-2000: Convergence Between Countries and Stability Inside," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(2), pages 139-175, December.
    16. Steven J. Davis, 1992. "Cross-Country Patterns of Change in Relative Wages," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 239-300, National Bureau of Economic Research, Inc.
    17. Clarke, George R. G., 1995. "More evidence on income distribution and growth," Journal of Development Economics, Elsevier, vol. 47(2), pages 403-427, August.
    18. Andrés Rodríguez-Pose & Vassilis Tselios, 2010. "Inequalities in income and education and regional economic growth in western Europe," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(2), pages 349-375, April.
    19. Nicholas T. Longford & Maria Grazia Pittau & Roberto Zelli & Riccardo Massari, 2012. "Poverty and inequality in European regions," Journal of Applied Statistics, Taylor & Francis Journals, vol. 39(7), pages 1557-1576, January.
    20. Cristiano Perugini & Gaetano Martino, 2008. "Income Inequality Within European Regions: Determinants And Effects On Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 373-406, September.
    21. Stephen Knowles, 2005. "Inequality and Economic Growth: The Empirical Relationship Reconsidered in the Light of Comparable Data," Journal of Development Studies, Taylor & Francis Journals, vol. 41(1), pages 135-159.
    22. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    23. Christophe Ehrhart, 2009. "The effects of inequality on growth: a survey of the theoretical and empirical literature," Working Papers 107, ECINEQ, Society for the Study of Economic Inequality.
    24. Olivier Blanchard & Stanley Fischer (ed.), 1992. "NBER Macroeconomics Annual 1992," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262521741, April.
    25. David Castells-Quintana & José María Larrú, 2015. "Does Aid Reduce Inequality? Evidence for Latin America," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 27(5), pages 826-849, December.
    26. Tello, Claudia & Ramos, Raúl, 2012. "Wage inequality and economic growth in Mexican regions," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 24, pages 115-152.
    27. Dusan Paredes & Victor Iturra & Marcelo Lufin, 2016. "A Spatial Decomposition of Income Inequality in Chile," Regional Studies, Taylor & Francis Journals, vol. 50(5), pages 771-789, May.
    28. M.O. Odedokun & Jeffery Round, 2004. "Determinants of Income Inequality and its Effects on Economic Growth: Evidence from African Countries," African Development Review, African Development Bank, vol. 16(2), pages 287-327.
    29. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    30. Pirotte, Alain, 1999. "Convergence of the static estimation toward the long run effects of dynamic panel data models," Economics Letters, Elsevier, vol. 63(2), pages 151-158, May.
    31. Chen, Been-Lon, 2003. "An inverted-U relationship between inequality and long-run growth," Economics Letters, Elsevier, vol. 78(2), pages 205-212, February.
    32. Raghuram G. Rajan, 2010. "Fault Lines: How Hidden Fractures Still Threaten the World Economy," Economics Books, Princeton University Press, edition 1, number 9111.
    33. Robinson, Sherman, 1976. "A Note on the U Hypothesis Relating Income Inequality and Economic Development," American Economic Review, American Economic Association, vol. 66(3), pages 437-440, June.
    34. Vassilis Tselios, 2008. "Income and educational inequalities in the regions of the European Union: Geographical spillovers under welfare state restrictions," Papers in Regional Science, Wiley Blackwell, vol. 87(3), pages 403-430, August.
    35. Oded Galor (ed.), 2009. "Inequality and Economic Development: The Modern Perspective," Books, Edward Elgar Publishing, number 12993.
    36. Oechslin, Manuel & Halter, David, 2010. "Inequality and Growth: The Neglected Time Dimension," CEPR Discussion Papers 8033, C.E.P.R. Discussion Papers.
    37. Daron Acemoglu & James A. Robinson, 2008. "Persistence of Power, Elites, and Institutions," American Economic Review, American Economic Association, vol. 98(1), pages 267-293, March.
    38. repec:hal:wpspec:info:hdl:2441/46mbanhapncmp6s9g2choh4pj is not listed on IDEAS
    39. Richard B. Freeman, 1994. "Working Under Different Rules," NBER Books, National Bureau of Economic Research, Inc, number free94-1.
    40. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
    41. Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2009. "The long-run determinants of inequality: What can we learn from top income data?," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 974-988, August.
    42. Castells-Quintana , David & Royuela, Vicente, 2012. "Unemployment and long-run economic growth: The role of income inequality and urbanisation," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 24, pages 153-173.
    43. Isabell Koske & Jean-Marc Fournier & Isabelle Wanner, 2014. "The Distribution Of Labor Income," World Scientific Book Chapters, in: Peter Hoeller & Isabelle Joumard & Isabell Koske (ed.), Income Inequality in OECD Countries What are the Drivers and Policy Options?, chapter 3, pages 43-84, World Scientific Publishing Co. Pte. Ltd..
    44. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January.
    45. Bebonchu Atems & Jason Jones, 2015. "Income inequality and economic growth: a panel VAR approach," Empirical Economics, Springer, vol. 48(4), pages 1541-1561, June.
    46. Gary S. Fields, 1979. "A Welfare Economic Approach to Growth and Distribution in the Dual Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(3), pages 325-353.
    47. Franco Peracchi, 2002. "The European Community Household Panel: A review," Empirical Economics, Springer, vol. 27(1), pages 63-90.
    48. Arthur Alderson & Jason Beckfield & Francois Nielsen, 2005. "Exactly How has Income Inequality Changed? Patterns of Distributional Change in Core Societies," LIS Working papers 422, LIS Cross-National Data Center in Luxembourg.
    49. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
    50. Mr. Chris Papageorgiou & Mr. Subir Lall & Ms. Florence Jaumotte, 2008. "Rising Income Inequality: Technology, or Trade and Financial Globalization?," IMF Working Papers 2008/185, International Monetary Fund.
    51. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    52. Kristian Behrens & Frédéric Robert‐Nicoud, 2014. "Survival of the Fittest in Cities: Urbanisation and Inequality," Economic Journal, Royal Economic Society, vol. 124(581), pages 1371-1400, December.
    53. Mark D. Partridge, 2005. "Does Income Distribution Affect U.S. State Economic Growth?," Journal of Regional Science, Wiley Blackwell, vol. 45(2), pages 363-394, May.
    54. repec:hal:spmain:info:hdl:2441/46mbanhapncmp6s9g2choh4pj is not listed on IDEAS
    55. Kaminska, Olena & Iacovou, Maria & Levy, Horacio, 2012. "Using EU-SILC data for cross-national analysis: strengths, problems and recommendations," ISER Working Paper Series 2012-03, Institute for Social and Economic Research.
    56. Pedro Cunha Neves & Sandra Maria Tavares Silva, 2014. "Inequality and Growth: Uncovering the Main Conclusions from the Empirics," Journal of Development Studies, Taylor & Francis Journals, vol. 50(1), pages 1-21, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raul Ramos & Vicente Royuela, 2014. "“Income inequality in Europe. Analysis of recent trends at the regional level”," IREA Working Papers 201425, University of Barcelona, Research Institute of Applied Economics, revised Oct 2014.
    2. David Castells-Quintana & Vicente Royuela, 2017. "Tracking positive and negative effects of inequality on long-run growth," Empirical Economics, Springer, vol. 53(4), pages 1349-1378, December.
    3. Gravina, Antonio Francesco & Lanzafame, Matteo, 2021. "Finance, globalisation, technology and inequality: Do nonlinearities matter?," Economic Modelling, Elsevier, vol. 96(C), pages 96-110.
    4. Cristiano Perugini & Gaetano Martino, 2008. "Income Inequality Within European Regions: Determinants And Effects On Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 373-406, September.
    5. Neves, Pedro Cunha & Afonso, Óscar & Silva, Sandra Tavares, 2016. "A Meta-Analytic Reassessment of the Effects of Inequality on Growth," World Development, Elsevier, vol. 78(C), pages 386-400.
    6. David Castells & Vicente Royuela, 2012. "Agglomeration, Inequality and Economic Growth: Cross-section and panel data analysis," ERSA conference papers ersa12p492, European Regional Science Association.
    7. Ademola Obafemi Young, 2019. "Growth Impacts of Income Inequality: Empirical Evidence From Nigeria," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 226-262, December.
    8. Brida, Juan Gabriel & Carrera, Edgar J. Sanchez & Segarra, Verónica, 2020. "Clustering and regime dynamics for economic growth and income inequality," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 99-108.
    9. David Castells-Quintana & Vicente Royuela, 2014. "Agglomeration, inequality and economic growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(2), pages 343-366, March.
    10. Marta Simões & João Andrade & Adelaide Duarte, 2013. "A regional perspective on inequality and growth in Portugal using panel cointegration analysis," International Economics and Economic Policy, Springer, vol. 10(3), pages 427-451, September.
    11. Dustin Chambers, 2005. "Inequality and Growth: A Semiparametric Investigation," Computing in Economics and Finance 2005 132, Society for Computational Economics.
    12. Jakub Bartak & Łukasz Jabłoński, 2020. "Inequality and growth: What comes from the different inequality measures?," Bulletin of Economic Research, Wiley Blackwell, vol. 72(2), pages 185-212, April.
    13. Karen Davtyan, 2016. "Interrelation among Economic Growth, Income Inequality, and Fiscal Performance: Evidence from Anglo-Saxon Countries," Hacienda Pública Española / Review of Public Economics, IEF, vol. 217(2), pages 37-66, June.
    14. José Carlos Coelho & José Alves, 2021. "How inequality drives growth: an investigation of the transmission channels for OECD countries," Working Papers REM 2021/0194, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    15. Gründler, Klaus & Scheuermeyer, Philipp, 2018. "Growth effects of inequality and redistribution: What are the transmission channels?," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 293-313.
    16. Shinhye Chang & Matthew W. Clance & Giray Gozgor & Rangan Gupta, 2019. "A Reconsideration of Kuznets Curve across Countries: Evidence from the Co-summability Approach," Working Papers 201970, University of Pretoria, Department of Economics.
    17. Łukasz Piętak, 2022. "Regional disparities, transmission channels and country's economic growth," Journal of Regional Science, Wiley Blackwell, vol. 62(1), pages 270-306, January.
    18. Jalil, Mohammad Muaz, 2009. "Re-examining Kuznets Hypothesis: Does Data Matter?," MPRA Paper 72557, University Library of Munich, Germany.
    19. Sirine MNIF, 2017. "The Impact of Inequality on Growth Driven by Technological Changes: a Panel of Developing Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(1), pages 127-140, March.
    20. Mehmet Balcilar & Rangan Gupta & Wei Ma & Philton Makena, 2021. "Income inequality and economic growth: A re‐examination of theory and evidence," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 737-757, May.

    More about this item

    Keywords

    Regional income inequality; European regions; Great Recession; D63; O18; R11; R12;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jahrfr:v:35:y:2015:i:2:p:123-146. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.