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Education and Income Inequality in the Regions of the European Union

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  • Andrés Rodríguez-Pose
  • Vassilis Tselios

Abstract

This paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel dataset for 102 regions over the period 1995-2000, it analyses how microeconomic changes in human capital distribution affect income inequality for the population as a whole and for normally working people. The different static and dynamic panel data analyses conducted reveal that the relationship between income per capita and income inequality, as well as between a good human capital endowment and income inequality is positive. High levels of inequality in educational attainment are also associated with higher income inequality. The above results are robust to changes in the definition of income distribution and may be interpreted as a sign of the responsiveness of the EU labor market to differences in qualifications and skills. Other results indicate that population ageing, female participation in the labor force, urbanization, agriculture, and industry are negatively associated to income inequality, while unemployment and the presence of a strong financial sector positively affect inequality. Finally, income inequality is lower in social-democratic welfare states, in Protestant areas, and in regions with Nordic family structures.

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Bibliographic Info

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0011.

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Date of creation: Nov 2008
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Handle: RePEc:cep:sercdp:0011

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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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Keywords: income inequality; educational attainment; educational inequality; regions; Europe;

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Cited by:
  1. Rodríguez-Pose, Andrés & Tselios, Vassilis & Winkler, Deborah & Farole, Thomas, 2013. "Geography and the Determinants of Firm Exports in Indonesia," World Development, Elsevier, vol. 44(C), pages 225-240.
  2. Agasisti, Tommaso & Cordero-Ferrera, Jose M., 2013. "Educational disparities across regions: A multilevel analysis for Italy and Spain," Journal of Policy Modeling, Elsevier, vol. 35(6), pages 1079-1102.
  3. Rodríguez-Pose, Andrés & Tselios, Vassilis, 2011. "Welfare regimes and the incentives to work and get educated," CEPR Discussion Papers 8187, C.E.P.R. Discussion Papers.
  4. Vassilis Tselios, 2009. "Growth and Convergence in Income Per Capita and Income Inequality in the Regions of the EU," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(3), pages 343-370.
  5. Kim, Dong-Hyeon & Lin, Shu-Chin, 2011. "Nonlinearity in the financial development–income inequality nexus," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 310-325, September.
  6. Checchi, Daniele & van de Werfhorst, Herman G., 2014. "Educational Policies and Income Inequality," IZA Discussion Papers 8222, Institute for the Study of Labor (IZA).
  7. Andrés Rodríguez-Pose & Yannis Psycharis & Vassilis Tselios, 2012. "Public investment and regional growth and convergence: Evidence from Greece," Papers in Regional Science, Wiley Blackwell, vol. 91(3), pages 543-568, 08.
  8. Andrés Rodríguez-Pose & Vassilis Tselios, 2009. "Mapping Regional Personal Income Distribution in Western Europe: Income Per Capita and Inequality," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(1), pages 41-70, January.
  9. Rafael Alvarado & Miguel Atienza, 2014. "The role of market access and human capital in regional wage disparities: Empirical evidence for Ecuador," Documentos de Trabajo en Economia y Ciencia Regional 52, Universidad Catolica del Norte, Chile, Department of Economics, revised Mar 2014.
  10. Rodríguez-Pose, Andrés & Tselios, Vassilis, 2008. "Inequalities in Income and Education and Regional Economic Growth in Western Europe," Papers DYNREG34, Economic and Social Research Institute (ESRI).

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