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Geographical Economics and Income Disparities Across Ecuadorian Regions: Analysis for the period 2007-2014

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  • Jesus Lopez-Rodriguez
  • Jorge Guido Sotomayor-Pereira2

Abstract

This paper focuses on the analysis of the role played by market potential in the spatial income structure observed in Ecuador over the period 2007-2014. Based on the geographical economics theory we derive the so called nominal wage equation which establishes a relationship between nominal wages and a distance weighted sum of the volume of economic activities in surrounding locations which is usually known as market potential. The estimation of this equation using Ecuadorian provincial data over the period 2007-2014 reveals that market potential plays a crucial role in explanation of the spatial distribution of per capita income. The results of our estimations are robust to the potential endogeneity problems of market potential which have been dealt with by using historical values of market potential and instrumental variables. Finally, we have also discovered a potential channel that could be affecting the spatial structure of per capita income in Ecuador, which is human capital.

Suggested Citation

  • Jesus Lopez-Rodriguez & Jorge Guido Sotomayor-Pereira2, 2018. "Geographical Economics and Income Disparities Across Ecuadorian Regions: Analysis for the period 2007-2014," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 662-687.
    • Handle: RePEc:ers:journl:v:xxi:y:2018:i:4:p:662-687
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    More about this item

    Keywords

    Provincial Disparities; Spatial Structure of Income; Market Potential; Ecuador.;
    All these keywords.

    JEL classification:

    • 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)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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