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Income inequality, decentralisation, and regional development in Western Europe

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  • Vassilis Tselios
  • Andrés Rodríguez-Pose
  • Andy Pike
  • John Tomaney
  • Gianpiero Torrisi

Abstract

This paper deals with the relationship between decentralisation, regional economic development, and income inequality within regions. Using multiplicative interaction models and regionally aggregated microeconomic data for more than 100 000 individuals in the European Union (EU), it addresses two main questions. First, whether fiscal and political decentralisation in Western Europe has an effect on within-regional interpersonal inequality. Second, whether this potential relationship is mediated by the level of economic development of the region. The results of the analysis show that greater fiscal decentralisation is associated with lower interpersonal income inequality, but, as regional income rises, further decentralisation is connected to a lower decrease in inequality. This finding is robust to the measurement and definition of income inequality, as well as to the weighting of the spatial units by their population size. Keywords: income inequality, income per capita, fiscal and political decentralisation, interaction, regions, Europe

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Bibliographic Info

Article provided by Pion Ltd, London in its journal Environment and Planning A.

Volume (Year): 44 (2012)
Issue (Month): 6 (June)
Pages: 1278-1301

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Handle: RePEc:pio:envira:v:44:y:2012:i:6:p:1278-1301

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Cited by:
  1. Minas, Renate & Bäckman, Olof & Jakobsen, Vibeke & Korpi, Tomas & Lorentzen, Thomas & Kauppinen, Timo, 2014. "Rescaling inequality? Welfare reform and local variation in social assistance payments," Working Paper Series 1/2014, Swedish Institute for Social Research.
  2. Caroline-Antonia Goerl & Mike Seiferling, 2014. "Income Inequality, Fiscal Decentralization and Transfer Dependency," IMF Working Papers 14/64, International Monetary Fund.
  3. Diaz-Serrano, Luis & Rodríguez-Pose, Andrés, 2014. "Decentralization and the Welfare State: What Do Citizens Perceive?," MPRA Paper 54123, University Library of Munich, Germany.
  4. Yasna Cortés Garriga & Dusan Paredes Araya, 2013. "El Fondo Común Municipal: ¿Cuál es el rol en la Convergencia de Ingresos Locales?," Documentos de Trabajo en Economia y Ciencia Regional 45, Universidad Catolica del Norte, Chile, Department of Economics, revised Apr 2013.
  5. Floriana Cerniglia & Riccarda Longaretti, 2013. "Federalism, education-related public good and growth when agents are heterogeneous," Journal of Economics, Springer, vol. 109(3), pages 271-301, July.
  6. Psycharis, Yannis & Rodríguez-Pose, Andrés & Tselios, Vassilis, 2012. "Public investment and regional growth and convergence: Evidence from Greece," CEPR Discussion Papers 9011, C.E.P.R. Discussion Papers.
  7. Horváth, Gyula & Lóránd, Balázs, 2012. "Decentralizáció és gazdasági fejlődés. Az olasz példa
    [Decentralization and economic development. The case of Italy]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1273-1298.

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