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Inequalities in Income and Education and Regional Economic Growth in Western Europe

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  • Rodríguez-Pose, Andrés
  • Tselios, Vassilis

Abstract

Does inequality matter for regional growth? This paper addresses this question by using microeconomic data for more than 100,000 individuals over a period of 5 years from the European Community Household Panel (ECHP) dataset, complemented with Eurostat's Regio data, in order to examine the impact of income and educational distribution on regional economic growth. Educational distribution is measured in terms of educational achievement as well as educational inequality, and income distribution in terms of income per capita and income inequality, not only for the whole of the population, but also for normally working people. Our results indicate that, given existing levels of inequality, an increase in a region's income and educational inequality has a significant positive relationship with subsequent economic growth. Nevertheless, the reverse does not seem to be the case, as we do not find a causal link between growth and changes in inequality levels. Despite the fact that educational achievement is positively correlated with economic growth, the results also suggest that inequalities in income and educational attainment levels matter more for economic performance than average income and educational attainment, respectively. Initial income levels, in contrast, are irrelevant for regional economic growth as they are very sensitive to the inclusion of control variables.

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Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG34.

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Length: 32 pages
Date of creation: 2008
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Handle: RePEc:esr:wpaper:dynreg34

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Keywords: Income inequality; educational attainment; educational inequality; economic growth; regions; Europe/growth;

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Cited by:
  1. Dan‐Olof Rooth & Anders Stenberg, 2012. "The Shape of the Income Distribution and Economic Growth – Evidence from Swedish Labor Market Regions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(2), pages 196-223, 05.
  2. Adelaide Duarte & Marta Simões, 2010. "Regional growth in Portugal: assessing the contribution of earnings and education inequality," GEMF Working Papers 2010-11, GEMF - Faculdade de Economia, Universidade de Coimbra.
  3. Adelaide P. S. Duarte & Marta C. N. Simões, 2011. "Inequality and Growth relevant Links for the Portuguese Economy," Book Chapters, Institute of Economic Sciences.
  4. 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.
  5. 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.
  6. Marta Simões & João Andrade & Adelaide Duarte, 2013. "A regional perspective on inequality and growth in Portugal using panel cointegration analysis," International Economics and Economic Policy, Springer, vol. 10(3), pages 427-451, September.
  7. Andrés Rodríguez-Pose & Vassilis Tselios, 2011. "Welfare regimes and the incentives to work and get educated," Working Papers 2011-01, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  8. Ana Poças & Elias Soukiazis, 2013. "Are health factors important for regional growth and convergence? An empirical analysis for the Portuguese districts," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 9(1/2), pages 44-64.
  9. Arne Melchior, 2009. "East-West Integration and the Economic Geography of Europe," CASE Network Studies and Analyses 0379, CASE-Center for Social and Economic Research.
  10. Leonel Prieto & Tagi Sagafi-nejad & Balaji Janamanchi, 2013. "A Bourdieusian Perspective on Acculturation: Mexican Immigrants in the United States," Administrative Sciences, MDPI, Open Access Journal, vol. 3(4), pages 290-305, December.

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