Regional inequalities, economic crises and policies: an international panel analysis

Davide Furceri, Fabio Mazzola and Pietro Pizzuto

Applied Economics, 2022, vol. 54, issue 4, 484-505

Abstract: This paper examines the effects of economic downturns on regional inequalities. In a sample of 25 OECD countries for 1990–2014 period, we show that economic downturns are associated with a significant and long-lasting reduction in regional inequalities. Expansionary fiscal policy as well as higher share of the European development (cohesion) funds facilitate the response of lagging regions to negative nation-wide shocks, contributing to further stimulate the reduction in regional disparities. Additional evidence suggests that the effect of downturns tends to be larger in economies with a higher initial level of regional disparities in unemployment and human capital endowment.

Date: 2022
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DOI: 10.1080/00036846.2021.1963414

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