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Concentration of economic activity: Inequality-based measures

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  • Olga Alonso-Villar
  • Coral del Río

Abstract

This paper reflects about the invariance property that regional economics is implicitly assuming when “relative” inequality measures, such as the Gini index, are used to quantify the geographic concentration of economic activity. In addition, it proposes a new concentration measure that is based on an “absolute” inequality index. The properties of this variance-type index are analyzed. An “absolute” employment Lorenz curve is also proposed to measure concentration, the dominance criterion of which is consistent with this new index. Finally, the usefulness of the new measures is illustrated by using manufacturing employment data in Spain.

Suggested Citation

  • Olga Alonso-Villar & Coral del Río, 2010. "Concentration of economic activity: Inequality-based measures," Working Papers 1006, Universidade de Vigo, Departamento de Economía Aplicada.
    • Handle: RePEc:vig:wpaper:1006
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    References listed on IDEAS

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    More about this item

    Keywords

    Inequality measures; Geographic concentration; Axioms;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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