The Role of Neighborhood in the Analysis of Spatial Economic Inequality

Abstract

Spatial inequality measures should take into account the geographical position of the data of reference if the focus is on the spatial aspects of territorial inequality. However, these traditional spatial inequality measures like the Theil index do not distinguish among different locational situations. On the other hand, when analyzing the spatial decomposition of inequality, it is usual to express global inequality as a weighted sum of inequality values calculated for population subgroups (within component) plus the contribution arising out of differences among subgroup means (between component). Nevertheless, it is unclear whether the reported within and between contributions have been driven primarily by specific factors related to the spatial level of research or by neighborhood factors. The present paper has two main objectives. The first consists into propose a simple way to measure the role of the geographical position in economic inequality. The second aim is to provide an approach to decompose global inequality into its within-country and between-country components assessing which part of these components could be related to neighborhood factors. The proposals are illustrated for the case of European countries. Inequality within each of the countries and inequality between countries can be filtered of neighborhood components, showing inequality components related to specific (local) factors. For a considered spatial level, this exploratory approach can highlight the relevance of future place-based policies versus policies able to support and promote regional neighborhoods.