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Spatial inequality and development — Is there an inverted-U relationship?

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  • Lessmann, Christian

Abstract

This paper studies the hypothesis of an inverted-U-shaped relationship between spatial inequality and economic development. The theory of Kuznets (1955) and Williamson (1965) suggests that (spatial) inequality first increases in the process of development, and then decreases. To test this hypothesis I have used a unique panel data set of spatial inequalities in 56 countries at different stages of economic development, covering the period 1980–2009. Parametric and semiparametric regressions are carried out using cross-section and (unbalanced) panel data. The results provide strong support for the existence of an inverted-U. I also find some evidence that spatial inequalities increase again at very high levels of economic development.

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  • Lessmann, Christian, 2014. "Spatial inequality and development — Is there an inverted-U relationship?," Journal of Development Economics, Elsevier, vol. 106(C), pages 35-51.
  • Handle: RePEc:eee:deveco:v:106:y:2014:i:c:p:35-51
    DOI: 10.1016/j.jdeveco.2013.08.011
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    Cited by:

    1. Gluschenko, Konstantin, 2015. "‘Williamson’s Fallacy’ in Estimation of Inter-Regional Inequality," MPRA Paper 71075, University Library of Munich, Germany, revised 03 May 2016.
    2. Lessmann, Christian, 2013. "Foreign direct investment and regional inequality: A panel data analysis," China Economic Review, Elsevier, vol. 24(C), pages 129-149.
    3. Mauro Mussini, 2017. "Decomposing Changes in Inequality and Welfare Between EU Regions: The Roles of Population Change, Re-Ranking and Income Growth," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(2), pages 455-478, January.
    4. Christian Lessmann, 2016. "Regional Inequality and Internal Conflict," German Economic Review, Verein für Socialpolitik, vol. 17(2), pages 157-191, May.
    5. Lessmann, Christian & Seidel, André, 2017. "Regional inequality, convergence, and its determinants – A view from outer space," European Economic Review, Elsevier, vol. 92(C), pages 110-132.
    6. Gutmann, Jerg & Voigt, Stefan, 2017. "Why Adopt a Federal Constitution? And why Decentralize? – Determinants Based on a New Dataset," ILE Working Paper Series 6, University of Hamburg, Institute of Law and Economics.
    7. Alberto Alesina & Stelios Michalopoulos & Elias Papaioannou, 2016. "Ethnic Inequality," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 428-488.
    8. repec:bla:econpa:v:36:y:2017:i:4:p:367-379 is not listed on IDEAS
    9. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779 Elsevier.
    10. Eugenio Jose Silva Bitti & Muriel Fadairo & Cintya Lanchimba & Vivian-Lara Silva, 2016. "Spatial strategies in Brazilian Franchising; Behavior categories and Performance Outcome," Working Papers halshs-01292057, HAL.
    11. Alfonso Díez-Minguela & Rafael González-Val & Julio Martinez-Galarraga & M. Teresa Sanchis & Daniel A. Tirado, 2017. "The long-term relationship between economic development and regional inequality: South-West Europe, 1860-2010," Working Papers 0119, European Historical Economics Society (EHES).
    12. Leonardo Gasparini & Jessica Bracco & Luciana Galeano & Mariela Pistorio, 2018. "Desigualdad en países en desarrollo: ¿ajustando las expectativas?," CEDLAS, Working Papers 0224, CEDLAS, Universidad Nacional de La Plata.
    13. Dao-Zhi Zeng, 2016. "Capital mobility and spatial inequalities in income and industrial location," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(1), pages 109-128, March.
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    15. Georg Hirte & Christian Leßmann, 2014. "Trade, Integration, and Interregional Inequality," CESifo Working Paper Series 4799, CESifo Group Munich.
    16. Ezcurra, Roberto & Palacios, David, 2016. "Terrorism and spatial disparities: Does interregional inequality matter?," European Journal of Political Economy, Elsevier, vol. 42(C), pages 60-74.
    17. Sanchís Llopis, M. Teresa & Díez Minguela, Alfonso, 2018. "Regional income inequality in France : what does history teach us?," IFCS - Working Papers in Economic History.WH 26152, Universidad Carlos III de Madrid. Instituto Figuerola.
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    22. Modrego, Félix & Berdegué, Julio A., 2015. "A Large-Scale Mapping of Territorial Development Dynamics in Latin America," World Development, Elsevier, vol. 73(C), pages 11-31.
    23. Yongzheng Liu & Jorge Martinez-Vazquez & Alfred M. Wu, 2017. "Fiscal decentralization, equalization, and intra-provincial inequality in China," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(2), pages 248-281, April.
    24. Inklaar, Robert & Koetter, Michael & Noth, Felix, 2015. "Bank market power, factor reallocation, and aggregate growth," Journal of Financial Stability, Elsevier, vol. 19(C), pages 31-44.
    25. Kalenborn, Christine & Lessmann, Christian, 2014. "Regional Income Inequality lowers Life Satisfaction: Evidence from OECD Countries," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100561, Verein für Socialpolitik / German Economic Association.

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    Keywords

    Regional inequality; Kuznets curve; Panel data; Semiparametric estimates;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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