Geoscience Reference
In-Depth Information
particular to the geography of income inequality. An uneven geography of
inequality implies that different territories face different distributive tensions
and risk profiles.
Thus, to validate the argument, one should observe systematic relationships
among the different dimensions of economic geography. In particular, the geog-
raphy of income inequality is assumed to primarily reflect income and risk dif-
ferences between regions on the one hand, and the presence of cross-regional
economic externalities on the other. As a single proxy for the geography of
income inequality, I use the differences in levels of inequality between regions
(also referred to as the territorial structure of inequality). To substantiate this
premise, the first relationship on which the argument builds is:
ineq ir
it
) = α + β 1 gd p i it + β 2 unemp ir
f
(
+ β 3 tradeop it + β 4 mobility
+ (8.1)
it
Where ineq ir
it is a measure of the geographical differences in the incidence of
income inequality in a particular country at a particular point in time (super-
script ir stands for interregional). This measure works as a proxy for the geog-
raphy of income inequality. In turn, the geography of inequality is modeled
as a function of interregional differences in GDP per capita ( gd p i it ) and unem-
ployment ( unemp i it ), captured in both cases through the coefficient of variation
among regional rates. These two indicators capture those dimensions of the
geography of inequality that arguably drive preferences toward a more frag-
mented system of interpersonal redistribution. The former captures differences
in terms of income whereas the latter captures differences in the incidence
of labor market risks. In turn, trade openness ( tradeop it ) and mobility speak
to the scope of interregional social and economic externalities by capturing,
respectively, the impact of external shocks and the extent of citizens' (particu-
larly labor's) flow across territories (Cameron 1978 ; Garrett and Rodden 2003 ;
Rodrik 1998 ). The estimation of the impact of the latter offers an (admittedly
partial) test of the hypothesis that mobility reduces interregional differences
in the incidence of inequality, thus working facilitating the centralization of
interpersonal redistribution (hypothesis 1).
Is the geography of inequality related to the factors identified in the the-
oretical model developed in Chapter 2 ? And do these factors operate in the
specific direction hypothesized by the argument? In addressing these questions,
Table 8.1 reports three different estimations of equation (8.1) , including OLS
(robust) and Panel Corrected Standard Errors (with and without correcting for
autocorrelation). 1
The results are generally consistent with the logic developed in the prefer-
ence formation model. While income and labor market risk differences increase
cross-regional differences in terms of inequality, more exposure to external
shocks and larger levels of mobility increase the levels of risk sharing between
1
For definitions and sources of variables, see Appendix D.
Search WWH ::




Custom Search