INCOME INEQUALITY,ECONOMIC GROWTH,AND THE DISTRIBUTION OF INCOME GAINS: EVIDENCE FROM THE U.S. STATES*

ABSTRACT This paper first investigates a relationship between economic growth and income inequality using U.S. states data, a state cost‐of‐living deflator, and nonlinearity. It then explores the distribution of income gains among different income groups. We find that the impact of inequality on growth is nonlinear. Lowering inequality or increasing it substantially reduces growth; thus stable inequality may be good for growth. Economic growth affects incomes of the poor, the middle‐income group, and the rich similarly with the elasticity of one. Education and labor market policies become important in promoting growth and improving income gains of the poor.     

An Assessment of the Causal Relationship between Growth and Inequality in Spanish Regions

This paper analyses the causal relationship between economic growth and income inequality in Spanish regions from 1970 to 2000. We examine such a relationship using a panel of data with four time observations on the level variables for each region. Thus, we use a modified form of traditional Granger causality tests to suit the short times series that are available. Applying a sum–difference test, we conclude that the empirical evidence supports the hypothesis that gross domestic product (GDP) per capita growth in Spanish regions leads to less income inequality, rather than any other possible causal relationship.     

THE IMPACT OF LOCAL DECENTRALIZATION ON ECONOMIC GROWTH: EVIDENCE FROM U.S. COUNTIES*

ABSTRACT We analyze the impact of fiscal decentralization on U.S. county population, employment, and real income growth. Our findings suggest that government organization matters for local economic growth, but that the impacts vary by government unit and by economic indicator. We find that single‐purpose governments per square mile have a positive impact on metropolitan population and employment growth, but no significant impact on nonmetropolitan counties. In contrast, the fragmentation of general‐purpose governments per capita has a negative impact on employment and population growth in nonmetropolitan counties. Our results suggest that local government decentralization matters differently for metropolitan and nonmetropolitan counties.     

TRENDS IN NEIGHBORHOOD INCOME INEQUALITY IN THE U.S.: 1980–2000*

ABSTRACT This paper reports evidence on the geographic pattern of income inequality, both within and between neighborhoods, across a sample of 359 U.S. metropolitan areas between 1980 and 2000. The results indicate that overall income inequality within a metro area tends to be driven by variation within neighborhoods, not between them, although we find that between‐neighborhood differences rose dramatically during the 1980s and subsided somewhat during the 1990s. While this trend is similar to what existing research has found, our findings reveal potentially important differences in the magnitudes of the changes depending on whether neighborhoods are defined by block groups or tracts.     

Inclusive growth from an urban perspective: a challenge for the metropolis of the twenty-first century

This paper addresses the study of inclusive growth from an urban perspective. It proposes to focus the relationship between urban economic growth and income distribution in cities in which manufacturing production and external demand play a central role. Opposed to the literature that considers economic growth leads to an increase in inequality in income distribution, we present some operative economic tools from Marshallian Industrial Districts theory and from urban economic theory with which to develop an economic strategy for inclusive urban growth, making possible to achieve simultaneously economic growth and improvements in income distribution. An interesting example of a metropolis with a dynamic of economic and employment growth compatible with a reduction in income inequality is provided by Barcelona. This metropolis disposes a Survey of living conditions and habits of the population since 1986 that allows an analysis in terms of inclusive urban growth.     

江苏省区域经济差异与发展战略演变初探

改革开放以来,江苏省分别实施了区域均衡发展、非均衡发展、区域共同发展和苏北大发展战略,造成了各区域间经济增长速度的差异,导致区域经济发展失衡,其主要表现为苏南、苏中与苏北三大经济区域间的差异和县域经济差异的不断扩大。在分析了现阶段江苏省沿江开发战略对区域发展差异的影响,立足区域整合的角度,提出加快沿江开发与苏北互动发展的对策与措施,以期实现江苏省区域经济的协调发展,扭转南北经济差异进一步扩大的趋势。     

FIRM SIZES AND ECONOMIC DEVELOPMENT: ESTIMATING LONG‐TERM EFFECTS ON U.S. COUNTY GROWTH, 1990–2000

This paper investigates the role of the business size distribution on income and employment growth in U.S. counties from 1990 to 2000. We measure the business size distribution as the share of employees across nine establishment size categories that range from microfirms (one to four employees) to large firms (1,000+ employees) and using three indices similar to a Gini coefficient. Results show that the business size distribution has a significant impact on county‐level growth patterns. Employment shares in small firms increase employment growth, but decrease income growth. One possible conclusion suggests policies emphasizing small firms and entrepreneurship during times of high unemployment.     

Environmental Compliance Costs and the Distribution of Emissions in the U.S.

Using the properties of the Gini coefficient, a structural model is developed to assess the impact of uniform changes in environmental compliance costs on the distribution of per capita emissions across U.S. counties and states, a distribution that places a larger burden on minorities. Using data from the U.S. EPA's Toxic Release Inventory and three state-specific measures of environmental compliance costs, we find that uniform increases in federal environmental standards have little impact on the distribution of environmental hazards, and may actually exacerbate spatial inequality. As a result, Federal standards that target specific high pollution locations are necessary to redress current inequities.     

EDUCATION AND INCOME INEQUALITY IN THE REGIONS OF THE EUROPEAN UNION*

ABSTRACT This paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel dataset for 102 regions over the period 1995–2000, it analyses how microeconomic changes in human capital distribution affect income inequality for the population as a whole and for normally working people. The different static and dynamic panel data analyses conducted reveal that the relationship between income per capita and income inequality, as well as between a good human capital endowment and income inequality is positive. High levels of inequality in educational attainment are also associated with higher income inequality. The above results are robust to changes in the definition of income distribution and may be interpreted as a sign of the responsiveness of the EU labor market to differences in qualifications and skills. Other results indicate that population ageing, female participation in the labor force, urbanization, agriculture, and industry are negatively associated to income inequality, while unemployment and the presence of a strong financial sector positively affect inequality. Finally, income inequality is lower in social‐democratic welfare states, in Protestant areas, and in regions with Nordic family structures.     

Spatial Inequality Between and Within Urban Areas: The Case of Israeli Cities

Central areas enjoy greater efficiency in the production of goods and services than do outlying areas. Because of the inherent advantages of central areas over outlying areas, disparities among regions do not vanish over time. On the contrary, centripetal forces increase inequalities across space. The phenomena of increased globalization, trade liberalization and treaties among countries not only enable the flow of labour, products (export) and foreign direct investment but also help reduce spatial inequality between countries. These phenomena also induce greater spatial economic concentration within a country. Thus, although disparities among countries decrease, a widening gap is observed between regions within countries and within large urban areas. In the empirical part, we analyse the general patterns of spatial inequality found among 55 localities in Israel with population size over 20,000. Looking at the spatial inequality relationship, both within and between cities in Israel, we show how all economic indicators measured, including inequality, decrease with distance from the core. Localities in the periphery that experience greater equality also experience lower average income, lower education, less self-employment and more unemployment.     

Equilibrium and Economic Growth: Spatial Econometric Models and Simulations

Neoclassical theory assumes diminishing returns to capital and spatially constant exogenously-determined technological progress, although it is questionable whether these are realistic assumptions for modeling manufacturing productivity growth variations across European Union (E.U.) regions. In contrast, the model developed in this paper assumes increasing returns and spatially varying technical progress, and is linked to endogenous growth theory and particularly to 'new economic geography' theory. Simulations, involving 178 E.U.regions, show that productivity levels and growth rates are higher in all E.U. regions when the financially assisted (Objective 1) regions have faster output growth. This also reduces inequalities in levels of technology. Allowing the core regions to grow faster has a similar effect of raising productivity growth rates across the E.U., although inequality increases. Thus, the simulations are seen as an attempt to develop a type of 'computable geographical equilibrium' model which, as suggested by Fujita, Krugman, and Venables (1999), is the way theoretical economic geography needs to evolve in order to become a predictive discipline.     

Laboratories of (In)equality? Redistributive Policy and Income Inequality in the American States

Prior literature has emphasized demographic, economic, and political explanations for increasing income inequality in the United States, with little attention paid to the role of state‐level policy. This is despite great variation across states in both the level of inequality and the rate at which it is rising. This paper asks whether differences in state policy choices can help explain this variation; specifically, we examined a range of state redistributive policies enacted between 1980 and 2005 and identified four common approaches likely to impact inequality: taxes on the wealthy, taxes on the poor, spending on the poor, and labor market policies. We used pooled cross‐sectional time‐series data and a fixed‐effects model to assess the relationship between states’ use of each policy approach and two measures of market income inequality: the Gini coefficient and the income share of the top 1 percent. We find policies played a significant role in shaping income inequality in the states. For three of these four policy approaches, we found less inequality following expansions of state redistributive policy. Yet, for another, we identified the opposite pattern. These findings highlight the importance of state policy choices in shaping market inequality, and have implications for designing state policies to reduce income inequality since the success of these efforts depends on the policy approach used to redistribute income and wealth.     

Regional Analysis of China's Green GDP

A Chinese economist and U.S.-based economic geographer investigate China's move toward introducing "greener" measures of economic output to better assess the environmental costs associated with the country's recent economic development. More specifically, the authors applied a model of green gross regional product (GGRP) that adjusts for the costs of growth arising from negative environmental externalities. They then conduct a spatial analysis of the indicator's distribution across China's provinces in 2007 in an attempt to better understand the factors explaining its patterns. The analysis indicates that once environmental externalities in the form of industrial wastes are accounted for, the coastal—inland divide that traditionally describes China's geography of income inequality is much less obvious. Rather a more diffuse pattern emerges, in which some poor provinces are found to be relatively efficient regional producers whereas certain wealthier ones are not.     

Regional inequality in the U.S.: Evidence from city-level purchasing power

Using quarterly data for 42 products over the period from 1990 to 2015, we find that there has been a large and growing dispersion of purchasing power across U.S. cities since 1990 and the dispersion varies widely across products. We also find that total factor productivity shock precedes or predicts the rise in regional inequality of purchasing power. We view that the growing regional inequality found in the purchasing power among U.S. cities might have proceeded after nationwide productivity shocks mainly by the cities with higher share of skilled workers through the products with more flexible price adjustments.     

The Causes of Regional Variations in U.S. Poverty: A Cross-County Analysis

The persistence of poverty in the modern American economy, with rates of poverty in some areas approaching those of less advanced economies, remains a central concern among policy makers. Therefore, in this study we use U.S. county-level data to explore potential explanations for the observed regional variation in the rates of poverty. The use of counties allows examination of both nonmetropolitan area and metropolitan area poverty. Factors considered include those that relate to both area economic performance and area demographic composition. Specific county economic factors examined include economic growth, industry restructuring, and labor market skills mismatches.     

Residential property disparities in city districts in Prague,Czech Republic

City districts are often classified as ‘rich’ or ‘poor,’ a phenomenon that occurs within cities all over the world. While income inequality, wealth inequality, and other kinds of social inequality are frequently tracked, there is a surprising lack of research concentrating on how social inequality manifests as differences between parts of cities, especially outside of the U.S. That is mostly due to insufficient available data. In this paper, we propose a methodology for measuring the relative inequality between city districts by using the average prices of residential properties in various parts of the city, and assessing their relative difference. This approach has several advantages, as property listings are often readily available even in cities where income data is not. This methodology has potential for measuring developments in inequality in a much wider range of cities. As a proof of concept, we apply this methodology to property prices in Prague during the period 2003–2012 to identify a trend of either growing or decreasing inequality among individual parts of the city. We have found that during this period the disparity has grown only 5.97%, which means the overall growth of disparity between the city districts was negligible.     

INEQUALITY IN CITIES*

ABSTRACT Much of the inequality literature has focused on national inequality, but local inequality is also important. Crime rates are higher in more unequal cities; people in unequal cities are more likely to say that they are unhappy. There is a negative association between local inequality and the growth of city‐level income and population, once we control for the initial distribution of skills. High levels of mobility across cities mean that city‐level inequality should not be studied with the same analytical tools used to understand national inequality, and policy approaches need to reflect the urban context. Urban inequality reflects the choices of more and less skilled people to live together in particular areas. City‐level skill inequality can explain about one‐third of the variation in city‐level income inequality, while skill inequality is itself explained by historical schooling patterns and immigration. Local income also reflects the substantial differences in the returns to skill across, which are related to local industrial patterns.     

Natural disasters and relief assistance: Empirical evidence on the resilience of U.S. counties using dynamic propensity score matching

This paper utilizes a novel dynamic propensity score matching approach for multiple cohorts of U.S. counties between 1989 and 1999 to examine local economy resilience to rare natural disasters. Affected counties are sorted based on disaster intensity and are carefully matched to similar counties that did not experience a disaster. A difference‐in‐difference estimator compares trends of affected counties’ postdisaster business establishments, employment, and payroll to counterfactual trends in the matched counties. All affected counties experienced short‐run drops in economic activity that was particularly noticeable in higher‐intensity disasters. In the longer run, less distressed counties returned to their estimated counterfactual trends, but counties with lower predisaster socioeconomic conditions still lagged in growth, particularly in cases of lower‐intensity disasters. Policymakers can use this information to better prepare responses to future disasters.     

Migration and regional inequality: changing characteristics of China’s economic inequality

Scholars studying economic inequality in China have maintained that regional inequality and economic divergence across provinces have steadily increased over the past 30 years. New studies have shown that this trend is a statistical aberration; calculations show that instead of quickly and sharply rising, regional inequality has actually decreased, and most recently, remained stable. Our study suggests that China’s unique migratory regime is crucial to understanding these findings. We conduct a counterfactual simulation to demonstrate how migration and remittances have mitigated income inequality across provinces in order to show that without these processes, we would have seen more of a rise in interprovincial income inequality. We conclude by arguing that inequality in China is still increasing, but it is changing and becoming less place-based. As regional inequality decreases, there are signs that point to the increasing importance of interpersonal inequality.     

LOCAL INPUT AND PRODUCTIVITY GROWTH IN U.S. MANUFACTURING: 1972–2002*

ABSTRACT This research analyzes manufacturing growth and decline across metropolitan and nonmetropolitan regions during the 1972–2002 period. We decompose real value added growth across local labor market areas in the lower 48 U.S. states into contributions from labor, capital, and total factor productivity. We then estimate a model describing the long‐run growth of labor, capital, and productivity and find that increased productivity increases the growth of labor and capital, as well as a positive correlation between labor and capital stock growth. We also find evidence that human capital investment and agglomeration economies encourage productivity growth, while unionization discourages it.