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The dynamics of regional inequalities

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  • Eric Strobl,
  • Salvador Barrios

Abstract

This paper analyses empirically the link between regional inequalities and economic development. Our starting hypothesis in this regard is that the evolution of regional inequalities should follow a bell-shaped curve depending on the level of national economic development since growth by its very nature is unlikely to appear everywhere at the same time, as has been argued by a number of authors, such as Kuznets (1955) to Lucas (2000). We test this hypothesis econometrically using semi-parametric estimation techniques and regional data for a panel of European countries. Our results provide strong support for such a bell-shaped curve and are robust to changing the regional administrative units and the time period, as well as controlling for other possible determinants of regional inequalities. We derive a number of policy implications from our results.

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Paper provided by FEDEA in its series Working Papers with number 2006-01.

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Date of creation: Feb 2006
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Handle: RePEc:fda:fdaddt:2006-01

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