Inequality, neighbourhoods and welfare of the poor
This paper investigates how neighbourhood effects interacting with income inequality affect poor people's ability to access basic facilities like health care services, schooling and so on. We model this interaction by integrating consumers' income distribution with the spatial distribution of their location and explore the consequences of an increase in income inequality on the welfare of the poor in general, and their access to market in particular. We find inverted-U shape relationships between income inequality and market access and welfare of the poor: if we compare a cross-section of societies, the poor community as a whole is initially better-off living in relatively richer societies, but, beyond a point, the aggregate market access and consumer surplus of the poor starts declining as the society becomes richer. There exist multiple equilibria: a bad equilibrium where all the poor are excluded exists simultaneously with a good equilibrium where at least some poor (if not all of them) get served by the market. We have identi?ed the higher income gap between rich and poor as the key factor that exposes the poor to this complete exclusion possibility. Finally comparing a mixed-income neighbourhood where rich and poor live side by side with a single-income homogeneous neighbourhood we find that the poor are better-off living in the mixed neighbourhood as long as the poor income is below a certain feasibility threshold.
|Date of creation:||Jun 2011|
|Contact details of provider:|| Postal: 7, S. J. S. Sansanwal Marg, New Delhi - 110016|
Web page: http://www.isid.ac.in/~pu/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jaskold Gabszewicz, J. & Thisse, J. -F., 1979.
"Price competition, quality and income disparities,"
Journal of Economic Theory,
Elsevier, vol. 20(3), pages 340-359, June.
- Daniel Aaronson, "undated".
"Using Sibling Data to Estimate the Impact of Neighborhoods on Children's Educational Outcomes,"
IPR working papers
95-20, Institute for Policy Resarch at Northwestern University.
- Daniel Aaronson, 1998. "Using Sibling Data to Estimate the Impact of Neighborhoods on Children's Educational Outcomes," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 915-946.
- Daniel Aaronson, 1996. "Using sibling data to estimate the impact of neighborhoods on children' s educational outcomes," Working Paper Series, Macroeconomic Issues WP-96-19, Federal Reserve Bank of Chicago.
- Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2007.
"Competition and Waiting Times in Hospital Markets,"
CESifo Working Paper Series
2124, CESifo Group Munich.
- Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2007. "Competition and Waiting Times in Hospital Markets," NIPE Working Papers 9/2007, NIPE - Universidade do Minho.
- Brekke, Kurt Richard & Siciliani, Luigi & Straume, Odd Rune, 2007. "Competition and Waiting Times in Hospital Markets," CEPR Discussion Papers 6285, C.E.P.R. Discussion Papers.
- Handa, Sudhanshu, 2002. "Raising primary school enrolment in developing countries: The relative importance of supply and demand," Journal of Development Economics, Elsevier, vol. 69(1), pages 103-128, October.
- Mark Montgomery & Monica Grant & Barbara Mensch & Rania Roushdy, 2005. "Children's Schooling in Developing-Country Slums: A Comparison of Egypt and India," Department of Economics Working Papers 05-07, Stony Brook University, Department of Economics.
- Alesina, Alberto F & Rodrik, Dani, 1991.
"Distributive Politics and Economic Growth,"
CEPR Discussion Papers
565, C.E.P.R. Discussion Papers.
- Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
- Alberto Alesina & Dani Rodrik, 1991. "Distributive Politics and Economic Growth," NBER Working Papers 3668, National Bureau of Economic Research, Inc.
- Mohammad Niaz Asadullah, 2011. "Intra- and inter-household externalities in children's schooling: evidence from rural residential neighbourhoods in Bangladesh," Applied Economics, Taylor & Francis Journals, vol. 43(14), pages 1749-1767.
- Sharada Weir, 2007. "An examination of some mechanisms underlying externality benefits of girls' schooling," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(1), pages 203-222, February.
- Neven, D. & Thisse, J-F., 1989. "On Quality And Variety Competition," CORE Discussion Papers 1989020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Mark R. Montgomery & Paul C. Hewett, 2004.
"Urban Poverty and Health in Developing Countries: Household and Neighborhood Effects,"
Department of Economics Working Papers
04-01, Stony Brook University, Department of Economics.
- Mark Montgomery & Paul Hewett, 2005. "Urban poverty and health in developing countries: Household and neighborhood Effects," Demography, Springer;Population Association of America (PAA), vol. 42(3), pages 397-425, August.
- Dreze, Jean & Sen, Amartya, 2002. "India: Development and Participation," OUP Catalogue, Oxford University Press, edition 2, number 9780199257492.
- Glick, Peter & Sahn, David E., 2006. "The demand for primary schooling in Madagascar: Price, quality, and the choice between public and private providers," Journal of Development Economics, Elsevier, vol. 79(1), pages 118-145, February.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
- Das, Jishnu & Hammer, Jeffrey, 2005. "Which doctor? Combining vignettes and item response to measure clinical competence," Journal of Development Economics, Elsevier, vol. 78(2), pages 348-383, December.
When requesting a correction, please mention this item's handle: RePEc:ind:isipdp:11-07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar)
If references are entirely missing, you can add them using this form.