Inequalities, spatial disparities and agglomeration of economic activity in European regions

Ricardo Pozzi (riccardo.pozzi@uniurb.it), Rosalba Rombaldoni (rosalba.rombaldoni@uniurb.it) and Edgar Sánchez Carrera (edgarjavier.sanchezcarrera@unifi.it)
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Ricardo Pozzi: Department of Economics, Society & Politics, Università di Urbino Carlo Bo
Rosalba Rombaldoni: Department of Economics, Society & Politics, Università di Urbino Carlo Bo

No 1805, Working Papers from University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini

Abstract: European Union defines economic and social cohesion as one of the main priorities, however some theoretical and empirical evidence of regional inequalities in Europe, indicates that a process of convergence has been taking place between countries but not within regions inside countries. The first aim of the paper is that of giving an assessment of the existing spatial inequalities and of their recent evolution in the last 15 years for regions of 22 EU members. Our empirical evidence confirms wider disparities at regional level than at country level,and a growing disconnection between the geography of production, that becomes more unequal, and the geography of incomes (so that we might have regional convergence but not regional cohesion). Alsoin the case of Italy this seems to be proved. The second objective of the present work is twofold: on the one hand it investigates how the process of spatial economic concentration is affecting growth and disparities among European regions. On the other hand, the paper takes the opportunity to verify the impact of spatial inequalities to social inequalities. Our results suggest that interpersonal inequalities are affected by spatial disparities and agglomeration of economic activity has a defined role in this process. Other determinants, such as social expenditure and the level of wealth,mitigate but do not cancelthe effect of spatial inequalities.Moreover, the positive relationship between growth of regional disparities and GDP could suggest a possible trade-off between spatial equity and growth with the implication that on policy ground EU has to make a choice whether reversing or not the process of economic concentration. In addition to this the recent changes in inter-regional inequalitiesadvices a reconsideration of the usual framework underlying policy,especially the people-versus-place division in policy formulation.

Keywords: dynamic panel; economic geography; European Union; regional inequality; spatial agglomeration (search for similar items in EconPapers)
JEL-codes: R11 R12 R58 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2018, Revised 2018
New Economics Papers: this item is included in nep-eur, nep-geo and nep-ure
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http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_18_05.pdf First version, 2018 (application/pdf)

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