Arbeitspapier

How do regional price levels affect income inequality? Household-level evidence from 21 countries

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.

Language: Englisch

Bibliographic citation: Series: IES Working Paper ; No. 24/2018

Classification: Wirtschaft
Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
Regional Development Planning and Policy

Subject: income inequality
relative poverty
regional price levels
regional purchasing power parities
Luxembourg Income Study

Event: Geistige Schöpfung

(who): Jansky, Petr
Sedivy, Marek

Event: Veröffentlichung

(who): Charles University in Prague, Institute of Economic Studies (IES)

(where): Prague

(when): 2018

Handle: http://hdl.handle.net/10419/203203

Last update: 10.03.2025, 11:43 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Show original at data provider

Object type

Arbeitspapier

Associated

Jansky, Petr
Sedivy, Marek
Charles University in Prague, Institute of Economic Studies (IES)

Time of origin

2018

Other Objects (12)

Arbeitspapier