How Do Regional Price Levels Affect Income Inequality? Household-level Evidence From 21 Countries

Petr Janský and Marek Sedivy

No 752, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: Regional differences in prices levels are substantial in many countries, but little is known about how important they are for income inequality and relative poverty. To bridge this gap, we provide new evidence on the basis of the best available data and a novel two-step approach. First, we collect the largest cross-country dataset of regional price level estimates from 12 countries and use it to predict regional price levels in other countries. We then combine all these regional prices levels with household-level data from the Luxembourg Income Study, which gives us results for a final sample of 21 countries. We find that for some countries Gini coefficients and headcount poverty ratios are statistically significantly different when adjusted for regional price levels. For example, we show that adjusting for regional price levels would lower the Gini coefficients by 2% for Italy, 3% for Columbia and by 4% for Georgia, while it would increase the headcount poverty ratio by 6% for France and by 7% for Ireland. We conclude that regional price levels affect income inequality to a varying extent and should be taken into account by policy makers and in future research.

JEL-codes: O18 R11 R58 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2018-10
New Economics Papers: this item is included in nep-eur, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.lisdatacenter.org/wps/liswps/752.pdf (application/pdf)

Related works:
Working Paper: How Do Regional Price Levels Affect Income Inequality? Household-Level Evidence from 21 Countries (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lis:liswps:752

Access Statistics for this paper

More papers in LIS Working papers from LIS Cross-National Data Center in Luxembourg Contact information at EDIRC.
Bibliographic data for series maintained by Piotr Paradowski (publication@lisdatacenter.org).