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Mapping Regional Personal Income Distribution in Western Europe: Income Per Capita and Inequality

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Abstract

Past studies of regional economic disparities in the EU are fundamentally based on the information provided by macroeconomic variables. This paper considers regional disparities using microeconomic data aggregated at the regional level, paying attention not only to the average, but also to the inequality levels of individual incomes within regions. It maps regional personal income distribution in Western Europe, using data from the European Community Household Panel (ECHP) data survey covering more than 100,000 individuals, for 102 regions, and over the period 1995–2000. The Exploratory Spatial Data Analysis on income per capita and inequality reveals a rich set of findings. (1) There is a strong U-shaped relationship between income per capita and inequality which is highly robust across inequality measurements. (2) 80 percent of the income inequality in Europe takes place among individuals living in the same region. (3) Regions with similar income conditions tend to cluster, not only within national borders, but also across nations. (4) There is a North-South and an urban-rural divide where northern regions and city-regions have the highest economic development, as well as the lowest levels of inequality.

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Article provided by Charles University Prague, Faculty of Social Sciences in its journal Finance a uver - Czech Journal of Economics and Finance.

Volume (Year): 59 (2009)
Issue (Month): 1 (January)
Pages: 41-70
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Handle: RePEc:fau:fauart:v:59:y:2009:i:1:p:41-70

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Keywords: income inequality; regions; Exploratory Spatial Data Analysis; Europe; urbanization; EU North-South divide;

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  1. Andrés Rodríguez-Pose & Vassilis Tselios, 2007. "Education and income inequality in the regions of the European Union," Working Papers 2007-17, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  2. Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
  3. Juan R. Cuadrado-Roura, 2001. "Regional convergence in the European Union: From hypothesis to the actual trends," The Annals of Regional Science, Springer, vol. 35(3), pages 333-356.
  4. Roberto Ezcurra & Pedro Pascual & Manuel Rapun, 2006. "Regional mobility in the European Union," Applied Economics, Taylor and Francis Journals, vol. 38(19), pages 2237-2253.
  5. Rodriguez-Pose, Andres, 1998. "Dynamics of Regional Growth in Europe: Social and Political Factors," OUP Catalogue, Oxford University Press, number 9780198233831, December.
  6. Martin, Philippe, 1999. "Public policies, regional inequalities and growth," Journal of Public Economics, Elsevier, vol. 73(1), pages 85-105, July.
  7. 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.
  8. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  9. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
  10. Patricia Justino & Julie Litchfield & Yoko Niimi, 2004. "Multidimensional Inequality: An Empirial Application to Brazil," PRUS Working Papers 24, Poverty Research Unit at Sussex, University of Sussex.
  11. Roberto Ezcurra & Pedro Pascual, 2005. "Is there convergence in income inequality levels among the European regions?," Applied Economics Letters, Taylor and Francis Journals, vol. 12(12), pages 763-767.
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