IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/44805.html
   My bibliography  Save this paper

Decomposing European NUTS2 regional inequality from 1980 to 2009: national and European policy implications

Author

Listed:
  • Doran, Justin
  • Jordan, Declan

Abstract

Purpose – The purpose of this paper is to analyse income inequality for a sample of 14 European countries and their composite regions using data from the Cambridge Econometrics regional dataset from 1980 to 2009. The purpose of the paper is to provide insight into the dynamics of regional and national cohesion among the EU-14 countries studied. Design/methodology/approach – Initially, inequality is decomposed using the Theil coefficient into between and within country inequality to assess the extent to which convergence has occurred. To investigate the underlying causes of the changes in inequality, the Theil coefficient is further decomposed to assess the contribution of productivity and employment-population ratio differentials to inequality. Findings – The results indicate that while between-country inequality has declined, within-country inequality has increased by approximately 50 percent. Subsequent decomposition indicates that while productivity levels among regions have converged, the employment-population ratios have diverged substantially driving increasing levels of inequality. This suggests that while EU cohesion policies have reduced productivity inequalities they have had little effect in stimulating convergence of employment-population ratios across regions. Research limitations/implications – The paper argues that national priorities, particularly in the context of the current European economic crisis, are likely to hinder European Union level policies to reduce income inequality at a regional level. This may result in further increases in regional inequality among European regions. Originality/value – This paper's main contribution is to highlight how national convergence can lead to regional divergence being overlooked. The value of the paper is that it provides policy insights, based on empirical evidence, for European cohesion policy.

Suggested Citation

  • Doran, Justin & Jordan, Declan, 2013. "Decomposing European NUTS2 regional inequality from 1980 to 2009: national and European policy implications," MPRA Paper 44805, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:44805
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/44805/1/MPRA_paper_44805.pdf
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Ben Gardiner & Ron Martin & Tyler Peter, 2004. "Competitiveness, Productivity and Economic Growth across the European Regions," ERSA conference papers ersa04p333, European Regional Science Association.
    3. Krugman, Paul, 1998. "What's New about the New Economic Geography?," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 7-17, Summer.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    5. Ron Martin, 2001. "EMU versus the regions? Regional convergence and divergence in Euroland," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 51-80, January.
    6. Marinella Terrasi, 1999. "Convergence and divergence across Italian regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 33(4), pages 491-510.
    7. Young-Bae Kim, 2008. "Is There A Trade-off Between Regional Growth and National Income? Theory and Evidence from the EU," School of Economics Discussion Papers 1008, School of Economics, University of Surrey.
    8. Bernard Fingleton & Manfred Fischer, 2010. "Neoclassical theory versus new economic geography: competing explanations of cross-regional variation in economic development," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(3), pages 467-491, June.
    9. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    10. Michele Boldrin & Fabio Canova, 2001. "Inequality and convergence in Europe's regions: reconsidering European regional policies," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 205-253, April.
    11. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    12. Sergio J. Rey & Mark V. Janikas, 2005. "Regional convergence, inequality, and space," Journal of Economic Geography, Oxford University Press, vol. 5(2), pages 155-176, April.
    13. Aadne Cappelen & Fulvio Castellacci & Jan Fagerberg & Bart Verspagen, 2003. "The Impact of EU Regional Support on Growth and Convergence in the European Union," Journal of Common Market Studies, Wiley Blackwell, vol. 41, pages 621-644, September.
    14. Martin, Philippe, 1999. "Public policies, regional inequalities and growth," Journal of Public Economics, Elsevier, vol. 73(1), pages 85-105, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Elena Lasarte & Miguel Angel Marquez Paniagua, 2014. "Decomposition of Regional Income Inequality and Neighborhood Component: A Spatial Theil Index," Working Papers. Serie EC 2014-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    3. Catarina Moura e Sa Cardoso & Geetha Ravishankar, 2015. "Productivity growth and convergence: a stochastic frontier analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 42(2), pages 224-236, May.
    4. repec:taf:specan:v:13:y:2018:i:1:p:36-59 is not listed on IDEAS
    5. repec:eee:regeco:v:68:y:2018:i:c:p:260-267 is not listed on IDEAS
    6. Sorin GRIGORAS, 2014. "Sustainable Development Focused on Reducing Regional Inequalities. Romania Progression as Emergent Economy," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 47-56.

    More about this item

    Keywords

    Europe; Convergence; Cohesion Policy;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:44805. 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: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.