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Regional Income Inequality and Economic Growth: A Spatial Econometrics Analysis for Provinces in the Philippines

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Author Info

  • Pede, Valerien O.
  • Sparks, Adam H.
  • McKinley, Justin D.

Abstract

This paper revisits the inequality-growth relationship using data at the sub-national (provincial) level in the Philippines over the period 1991- 2000. A conditional convergence growth model is considered where the growth of per capita income depends on inequality and other growth factors. The contribution of each province to the overall inequality obtained from the Theil index is considered. Results indicate that inequality has a positive and significant effect on per capita income growth. However, the magnitude of the inequality effect is not stable across regions. Geographically Weighted Regression estimates show that the magnitude of the inequality growth relationship varies over a range of 0.72 to 3.36. Other results are also noteworthy in this study. Per capita income grows faster in provinces that contribute more to the overall inequality. Provinces with higher poverty incidence tend to grow less and human capital appears to be a significant booster to per capita income growth. Additionally, urban provinces tend to grow faster than the rural ones.

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Bibliographic Info

Paper provided by Australian Agricultural and Resource Economics Society in its series 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia with number 124402.

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Date of creation: 2012
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Handle: RePEc:ags:aare12:124402

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Related research

Keywords: clusters; growth; inequality; spatial econometrics; Community/Rural/Urban Development; Research Methods/ Statistical Methods; R11; R12; O15; C21;

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  1. Pietro Peretto & Sjak Smulders, 2002. "Technological Distance, Growth And Scale Effects," Economic Journal, Royal Economic Society, vol. 112(481), pages 603-624, July.
  2. Ugo Panizza, 1999. "Income Inequality and Economic Growth: Evidence from the American Data," IDB Publications 6877, Inter-American Development Bank.
  3. Clarke, George R. G., 1992. "More evidence on income distribution and growth," Policy Research Working Paper Series 1064, The World Bank.
  4. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
  5. Laura de Dominicis & Raymond J. G. M. Florax & Henri L. F. de Groot, 2008. "A Meta-Analysis On The Relationship Between Income Inequality And Economic Growth," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(5), pages 654-682, November.
  6. 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.
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Cited by:
  1. Muhammad Shahbaz & Ijaz Rehman & Nurul Mahdzan, 2014. "Linkages between income inequality, international remittances and economic growth in Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(3), pages 1511-1535, May.

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