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Regional Inequality, Convergence, and its Determinants - A View from Outer Space

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  • Christian Leßmann
  • André Seidel
  • Christian Lessmann

Abstract

This paper provides a new data set of regional income inequalities within countries based on satellite nighttime light data. We first empirically study the relationship between luminosity data and regional incomes for those countries where regional income data are available. We subsequently use our estimation results for an out-ofsample prediction of regional incomes based on the luminosity data, which allows us to investigate regional income differentials in developing countries as well, where official income data are lacking. Based on the predicted incomes, we calculate commonly used measures of regional inequality within countries. Investigating changes in the dispersion of regional incomes over time reveals that approximately 71-80% of all countries face sigma-convergence. Finally, we study different major determinants of the level of regional inequality based on cross-section data. Panel regressions investigate the within-country changes in inequality, i.e., the determinants of the convergence process. We find evidence for an N-shaped relationship between development and regional inequality. Geography, mobility and trade openness are also highly important.

Suggested Citation

  • Christian Leßmann & André Seidel & Christian Lessmann, 2015. "Regional Inequality, Convergence, and its Determinants - A View from Outer Space," CESifo Working Paper Series 5322, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5322
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    Cited by:

    1. Richard Bluhm & Melanie Krause, 2018. "Top Lights - Bright Cities and their Contribution to Economic Development," CESifo Working Paper Series 7411, CESifo Group Munich.
    2. Steinkraus, Arne, 2016. "Investigating the Carbon Leakage Effect on the Environmental Kuznets Curve Using Luminosity Data," EconStor Preprints 126084, ZBW - Leibniz Information Centre for Economics.
    3. Riccardo Pozzi & Rosalba Rombaldoni & Edgar J.Sanchez Carrera, 2018. "Inequalities, spatial disparities and agglomeration of economic activity in European regions," Working Papers 1805, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2018.
    4. 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).
    5. Chanda, Areendam & Kabiraj, Sujana, 2017. "Shedding Light on Regional Growth and Convergence in India," MPRA Paper 92506, University Library of Munich, Germany, revised 15 Dec 2018.
    6. Donna Feir & Rob Gillezeau & Maggie Jones, 2018. "Illuminating Indigenous Economic Development," Department Discussion Papers 1806, Department of Economics, University of Victoria.
    7. Rodr�guez-Pose, Andr�s, 2017. "The revenge of the places that don't matter (and what to do about it)," CEPR Discussion Papers 12473, C.E.P.R. Discussion Papers.
    8. Zuazu Bermejo, Izaskun, 2018. "Electoral Systems and Income Inequality: A Tale of Political Equality," IKERLANAK Ikerlanak;2018-109, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
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    10. Mukhopadhyay Abhiroop & Urzainqui David & Urzainqui David, 2018. "The dynamics of spatial and local inequalities in India," WIDER Working Paper Series 182, World Institute for Development Economic Research (UNU-WIDER).
    11. Donna Feir & Rob Gillezeau & Maggie Jones, 2017. "Illuminating Economic Development in Indigenous Communities," Department Discussion Papers 1704, Department of Economics, University of Victoria.
    12. Krause, Melanie & Bluhm, Richard, 2016. "Top Lights - Bright Spots and their Contribution to Economic Development," Annual Conference 2016 (Augsburg): Demographic Change 145773, Verein für Socialpolitik / German Economic Association.
    13. Gregor Pfeifer & Fabian Wahl & Martyna Marczak, 2018. "Illuminating the World Cup effect: Night lights evidence from South Africa," Journal of Regional Science, Wiley Blackwell, vol. 58(5), pages 887-920, November.
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    15. Sandra Achten & Christian Leßmann & Christian Lessmann, 2019. "Spatial inequality, geography and economic activity," CESifo Working Paper Series 7547, CESifo Group Munich.
    16. Fan Duan & Bulent Unel, 2017. "Persistence of Cities: Evidence from China," Departmental Working Papers 2017-08, Department of Economics, Louisiana State University.
    17. repec:taf:apeclt:v:26:y:2019:i:1:p:21-26 is not listed on IDEAS
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    19. 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.

    More about this item

    Keywords

    regional inequality; spatial inequality; sigma convergence; panel data; luminosity data; economic development; trade; ethnic fractionalization;

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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