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Instituto Valenciano de Investigaciones Económicas

Publications

Decomposition of Regional Income Inequality and Neighborhood Component: A Spatial Theil Index
WP-EC 2014-03
Decomposition of Regional Income Inequality and Neighborhood Component: A Spatial Theil Index
Márquez, M. Á. and Lasarte, E.
Year of publication: 2014
Keywords: Inequality decomposition; interregional inequality.
JEL Classification: C43, C10; R1, R12.
DOI: http://dx.medra.org/10.12842/WPEC_201403
Abstract
In recent decades, spatial effects have been incorporated into mainstream economics. Nevertheless, although the addition of these spatial effects to the inequality indexes would be a natural extension in this line of research, to our knowledge, there are not contributions assessing neighborhood effects in measures of regional economic inequalities. This paper proposes a Spatial Theil index that provides a decomposition of the Theil index that allows us to assess which part of regional inequalities is due to neighborhood features. The proposal is illustrated for the case of the Spanish peninsular provinces during the period 1980-2008.