Geoscience Reference
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35
30
25
20
15
10
5
0
1.89
2.12
2.35
2.58
2.81
3.04
3.37
Geography of Income Inequality
0 0.5 1
FIGURE 8.6. Income Geography and Representation as Determinants of the Level of
Decentralization of Redistribution in Political Unions Worldwide (predicted values)
of economic geography on the design of fiscal structures is either muted or, in
highly centripetal systems of representation, reversed.
Moreover, the substantive impact of the interaction between the geography
of inequality and representation is of similar magnitude. Figure 8.6 presents
the predicted level of decentralization of interpersonal redistribution on the
basis of the two-stage instrumental variables estimations (TSIV). Each of
the series reported captures how countries situated in different positions of
the representation scale (0-1) respond to changes in the spread of the geogra-
phy of income inequality. The thick vertical line indicates the point after which
the predicted changes meet the threshold of statistical significance. By way of an
example, an increase in the ratio between the wealthiest and the poorest region
from 2.7 to 3.3, leads to a 20% increase in the level of decentralization under
centrifugal representation (R
=
0). In contrast, under centripetal representation
(R
1), the same alteration in the geography of income inequality provokes a
centralizing impact of similar magnitude. These findings are not only consistent
with those obtained in a subsample of wealthier democracies but also with the
insights emerging from the in-depth study of the EU and Germany, two unions
at the extremes of the representation scale.
=
FISCAL STRUCTURES AND THE REPRODUCTION OF INEQUALITY
Both the argument in this topic and the findings reported so far bear direct
implications for understanding the impact of decentralized fiscal structures
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