We investigate whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997), with negative results. We then investigate the evolution of income inequality over the same period and its correlation with growth. The dominating feature is inequality convergence across countries. This convergence has been significantly faster amongst developed countries. Growth does not appear to influence the evolution of inequality over time. Outline

https://www.econstor.eu/bitstream/10419/81822/1/02-28.pdf

Economic growth and income inequality

Начала политической экономии и податного обложения = The principles of political economy and taxation

Why do firms cluster near one another? We test Marshall's theories of industrial agglomeration by examining which industries locate near one another, or coagglomerate. We construct pairwise coagglomeration indices for US manufacturing industries from the Economic Census. We then relate coagglomeration levels to the degree to which industry pairs share goods, labor, or ideas. To reduce reverse causality, where collocation drives input-output linkages or hiring patterns, we use data from UK industries and from US areas where the two industries are not collocated. All three of Marshall's theories of agglomeration are supported, with input-output linkages particularly important. (JEL L14, L60, O33, R23, R32)

/pdf/what-causes-industry-agglomeration-evidence-from-2v1cxwxm2s.pdf

What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns

The extent to which member states transpose EU directives in a timely fashion is often argued to be strongly associated with the general effectiveness of national bureaucracies. But what kind of institutional solutions ensure better performance? This paper examines the patterns and effects of departmental oversight across 28 ministries in Estonia, Hungary, Poland and Slovenia. In mapping the strength of oversight, it relies on around 90 structured interviews regarding the rules-in-use on transposition planning, legal review and monitoring of deadlines. The analysis of the impact of departmental oversight is based on an original dataset of over 300 directives with transposition deadlines between January 2005 and December 2008.

On the european union

Persistent poverty, economic decay, and lack of opportunities are at the root of considerable discontent in declining and lagging-behind areas the world over. Poor development prospects and an increasing belief that these places have ‘no future’ – as economic dynamism has been posited to be increasingly dependent on agglomeration economies – have led many of these so-called ‘places that don’t matter’ to revolt against the status quo. The revolt has come via an unexpected source: the ballot-box in a wave of political populism with strong territorial, rather than social foundations. I will argue that the populist wave is challenging the sources of existing well-being in both the less-dynamic and the more prosperous areas and that better, rather than more, place-sensitive territorial development policies are needed in order to find a solution to the problem. Place-sensitive development policies need, however, to stay clear of the welfare, income-support, and big investment projects of past development strategies if they are to be successful and focus on tapping into untapped potential and on providing opportunities to those people living in the places that ‘don’t matter’.

/pdf/the-revenge-of-the-places-that-don-t-matter-and-what-to-do-15nra2dx55.pdf

The revenge of the places that don’t matter (and what to do about it)

Regional computable general equilibrium (CGE) models have grown in popularity in recent years as an alternative method to examine regional economies and regional policy issues. However, the contribution of regional CGE models has yet to be assessed. Therefore, this paper surveys the literature related to regional CGE modeling. The survey includes a discussion of the contributions that CGE models have made to regional economic analysis. In addition, the basic approach of regional CGE modeling is outlined, and the key features of existing regional CGE models are detailed. The paper also appraises of the current state of the art of regional CGE modeling and suggests future research directions.

Regional Computable General Equilibrium Modeling: A Survey and Critical Appraisal:

Endogenous growth models have reignited interest in institutional and path dependencies in the economic growth process One reason for the interest in endogenous growth models is that they may explain why countries consistently grow at different rates In this vein, it has been recently proposed that greater economic inequality reduces future economic growth An important paper in this literature is by Torsten Persson and Guido Tabellini (1994), who will be referred to as PT PT's model shows why it is reasonable to expect a negative relationship between inequality and future economic growth Moreover, their empirical evidence is consistent with their contention If PT's findings are robust to other data sets, there would be important policy implications For example, they imply that policy makers should not only be concerned with the distributional implications of government policies for political and social reasons, but also because income distribution has long-run effects on economic growth This indicates that greater US income inequality since the early 1970's may have resulted in lower subsequent economic growth However, PT's results are somewhat fragile to various specifications, suggesting that they should be replicated with different data sets and over different time periods (PT p 617) With these implications in mind, this study employs data from a panel of US states to further explore the relationship between economic growth and income inequality In what follows, Section I summarizes PT's study and discusses how this comment extends their findings The empirical implementation and results in Section II directly examine the link between overall income inequality and growth Section III expands the analysis to alternative measures of income distribution and government policy One emphasis in Section III is the distinction between how the overall income distribution (especially at the tails) influences economic growth from how the relative well-being of the median voter affects economic growth Section IV provides some concluding discussion

Is inequality harmful for growth? Comment

The new economic geography (NEG) has become a mainstay of regional science in the last two decades, as signified by the awarding of Paul Krugman, the Nobel Prize. Yet, most American regional scientists and urban/regional economists do not use NEG in determining regional growth patterns. Instead, they rely on factors such as natural amenity migration, whose roots lie back to the work of Philip Graves in the mid 1970s. Conversely, two of the world's leading economic geographers – Allen Scott and Michael Storper – have strongly argued that job availability not household amenities have determined US regional dynamics. Given the disparity of views over the largest developed economy in the world, we hold a competition to determine which of these leading contenders accurately predict US interregional growth dynamics over the last 40–60 years. The runaway winner of the duel is natural amenity led growth with the crown going to Graves. Implications are drawn for both empirical research and EU economic integration.

Resumen
La nueva geografia economica (NEG, siglas en ingles) se ha convertido en un pilar de las ciencias regionales de las dos ultimas decadas, ratificado por el Premio Nobel otorgado a Paul Krugman. A pesar de ello, la mayoria de cientificos y economistas de ciencias urbanas/regionales no utilizan la NEG para determinar patrones de crecimiento regionales. En su lugar, se apoyan en factores tales como la migracion natural por recreo, cuyas raices se sustentan en el trabajo de Philip Graves de mediados de los 70. Por el contrario, dos de los lideres en geografia economica – Allen Scott y Michael Storper – han defendido energicamente que es la disponibilidad de empleos, y no la calidad de vida familiar, la que ha determinado las dinamicas regionales en los EE.UU. Dada la disparidad de opiniones acerca de la economia mas desarrollada del mundo, organizamos un torneo para determinar cuales de estos contendientes importantes son capaces de predecir la dinamica de crecimiento interregional en los EE.UU. durante los ultimos 40–60 anos. La victoria abrumadora del torneo es para el crecimiento motivado por recreo publico natural, con los laureles para Graves. Formulamos implicaciones tanto para estudios empiricos como para la integracion economica con la UE.

The duelling models: NEG vs amenity migration in explaining US engines of growth

The sources of urban agglomeration and the urban hierarchy have been extensively studied. Despite the pivotal role of the hinterlands in theories of the development of the urban hierarchy, little attention has been paid to the effect of urban agglomeration on growth in the hinterlands, particularly in a developed, mature economy. Therefore, this study examines how proximity to urban agglomeration affects contemporary population growth in hinterland U.S. counties. Proximity to urban agglomeration is measured in terms of both distances to higher-tiered areas in the urban hierarchy and proximity to market potential. Particular attention is paid to whether periodic changes and trends in underlying conditions (e.g., technology or transport costs) have altered population dynamics in the hinterlands and small urban centers. Over the period 1950-2000, we find strong negative growth effects of distances to higher-tiered urban areas, with significant, but lesser, effects of distance to market potential. Further, the costs of distance, if anything, appear to be increasing over time, consistent with various recent theories stressing the importance of how new technology affects the spatial distribution of activity in a mature urban system, while factors associated with the New Economic Geography are of lesser importance. (This abstract was borrowed from another version of this item.)

Lost in space: population growth in the American hinterlands and small cities

Numerous models propose an income-distribution/growth linkage, but the empirical evidence is ambiguous and depends on the regression approach. Mixed findings are not unexpected if there are differing short- and long-term responses. Approaches utilizing cross-sectional variation primarily reflect long-run effects, whereas those using time-series variation primarily reveal short-run effects. This study reconciles these issues using U.S. state data. After allowing for short- and long-run responses and for separate effects between the tails and middle of the distribution, the consistent pattern is the middle-class share and overall inequality are positively related to long-run growth. However, the short-run income-distribution response is less clear.

Mark D. Partridge

Papers

Regional Computable General Equilibrium Modeling: A Survey and Critical Appraisal:

Is inequality harmful for growth? Comment

The duelling models: NEG vs amenity migration in explaining US engines of growth

Lost in space: population growth in the American hinterlands and small cities

Does Income Distribution Affect U.S. State Economic Growth