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Income distribution dynamics across European regions: Re-examining the role of space

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  • Maza, Adolfo
  • Hierro, María
  • Villaverde, José

Abstract

This paper is aimed at exploring the role played by space on the dynamics of regional per capita income disparities in Europe between 1980 and 2005. To do that, an analysis based on the so-called distribution dynamics approach is used as benchmark. Therefore, the external shape of the per capita income distribution and movements within it are examined using both continuous and discrete techniques. This first approach reveals that regional disparities across European regions have decreased over time and, based on the computation of a mobility index, also highlights the existence of a medium mobility degree within the distribution. Subsequently, a spatially conditioned distribution dynamics approach is developed to adequately assess the spatial dimension of the convergence process. In this new approach per capita income of each region is doubly conditioned on its per capita income and the per capita income of its neighbours, both in a previous period. Additionally, a novel mobility index on the basis of a spatial Markov chains approach is devised. The results illustrate the importance of geography in explaining regional per capita income evolution; in particular it is shown that poor regions surrounded by rich regions have a much higher probability of escaping the poverty trap than other poor regions.

Suggested Citation

  • Maza, Adolfo & Hierro, María & Villaverde, José, 2012. "Income distribution dynamics across European regions: Re-examining the role of space," Economic Modelling, Elsevier, vol. 29(6), pages 2632-2640.
  • Handle: RePEc:eee:ecmode:v:29:y:2012:i:6:p:2632-2640
    DOI: 10.1016/j.econmod.2012.08.029
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    Cited by:

    1. Angelos Liontakis & Dimitris Kremmydas, 2013. "Food Inflation in EU: Distribution Analysis and Spatial Effects," Working Papers 2013-3, Agricultural University of Athens, Department Of Agricultural Economics.
    2. Barbara Pertold-Gebicka, 2014. "Job Market Polarization and Employment Protection in Europe," ACTA VSFS, University of Finance and Administration, vol. 8(2), pages 133-148.
    3. Chaudhry, Azam & Ikram, Rabia, 2015. "Does genetic proximity to high growth countries affect a country's own growth?," Economic Modelling, Elsevier, vol. 51(C), pages 444-453.
    4. Jaroslav Danhel & Eva Duchackova, 2014. "Behavioural and Empirical Topics for Discussion on Economic Science Paradigms," ACTA VSFS, University of Finance and Administration, vol. 8(2), pages 100-112.
    5. Tirtha Chatterjee, 2014. "Spatial convergence and growth in Indian agriculture: 1967-2010," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-035, Indira Gandhi Institute of Development Research, Mumbai, India.
    6. Jan Zapal, 2014. "Consumption Tax Incidence: Evidence from Natural Experiment in the Czech Republic," ACTA VSFS, University of Finance and Administration, vol. 8(2), pages 149-166.
    7. Tomas Konecny, 2014. "Linkages between the Financial and Real Sectors across Interest Rate Regimes: The Case of the Czech Republic," ACTA VSFS, University of Finance and Administration, vol. 8(2), pages 113-131.
    8. Rokicki, Bartlomiej & Hewings, Geoffrey J.D., 2016. "Regional convergence within particular country — An approach based on the regional price deflators," Economic Modelling, Elsevier, vol. 57(C), pages 171-179.
    9. Mihaela Simionescu, 2014. "The Beta-convergence Analysis and Regional Disparities in EU-28," ACTA VSFS, University of Finance and Administration, vol. 8(2), pages 167-177.
    10. Beyer, Robert C.M. & Stemmer, Michael A., 2016. "Polarization or convergence? An analysis of regional unemployment disparities in Europe over time," Economic Modelling, Elsevier, vol. 55(C), pages 373-381.

    More about this item

    Keywords

    Regional disparities; Distribution dynamics approach; Spatial dependence; Spatial Markov chains approach;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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