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Mobility and Mean Reversion in the Dynamics of Regional Inequality

Author

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  • Michael Beenstock

    (Department of Economics, Hebrew University of Jerusalem, Mt. Scopus, Jerusalem, Israel, msbin@mscc.huji.ac.il)

  • Daniel Felsenstein

    (Department of Geography, Hebrew University of Jerusalem, Mt. Scopus, Jerusalem, Israel, msdfels@mscc.huji.ac.il)

Abstract

The literature on regional growth convergence and economic disparities has tended to confound four interwoven measurement phenomena: 1) mean reversion (so-called beta convergence)—richer regions move towards the average from above and poorer regions from below; 2) diminishing inequality (so called sigma convergence)—the horizontal or spatial distribution of income becomes more equal; 3) mobility—the rank of a region in the overall distribution of income changes either upwards or downwards; and 4) leveling—the richer regions become poorer (leveling-down) or the poorer regions become richer (leveling-up). We use a new statistical methodology that treats these four phenomena on an integrated basis. The methodology is applied to Israeli regional earnings. We show that regional earnings are Gini divergent, but after adjusting earnings for regional cost-of-living differential, this picture is reversed. In the absence of genuine cost-of-living data, a simple and practical method is proposed, whereby regional house price data are used to proxy regional cost-of-living differentials.

Suggested Citation

  • Michael Beenstock & Daniel Felsenstein, 2007. "Mobility and Mean Reversion in the Dynamics of Regional Inequality," International Regional Science Review, , vol. 30(4), pages 335-361, October.
  • Handle: RePEc:sae:inrsre:v:30:y:2007:i:4:p:335-361
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Richard Harris & John Moffat & Victoria Kravtsova, 2011. "In Search of ‘ W ’," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(3), pages 249-270, February.
    2. Michael Beenstock & Daniel Felsenstein, 2005. "Regional Heterogenity and Conditional Convergence," ERSA conference papers ersa05p307, European Regional Science Association.
    3. Rey, Sergio, 2016. "Space-time patterns of rank concordance: Local indicators of mobility association with application to spatial income inequality dynamics," MPRA Paper 69480, University Library of Munich, Germany.
    4. Gluschenko, Konstantin & Karandashova, Maria, 2016. "Price Levels across Russian Regions," MPRA Paper 75041, University Library of Munich, Germany.
    5. Daniel Felsenstein, 2011. "Capital Deepening and Regional Inequality: An Empirical Analysis (refereed paper)," ERSA conference papers ersa10p759, European Regional Science Association.
    6. Portnov, Boris A. & Felsenstein, Daniel, 2010. "On the suitability of income inequality measures for regional analysis: Some evidence from simulation analysis and bootstrapping tests," Socio-Economic Planning Sciences, Elsevier, vol. 44(4), pages 212-219, December.
    7. Braude, Kobi & Navon, Guy, 2006. "הגירה פנימית בישראל
      [Internal Migration in Israel]
      ," MPRA Paper 9711, University Library of Munich, Germany.

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