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Lessmann, Christian
Year of Publication: 
Series/Report no.: 
CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3622
This paper studies the hypothesis of an inverted-U-shaped relationship between spatial inequality and economic development. The theory of Kuznets (1955) and Williamson (1965) suggests that (spatial) inequality first increases in the process of development, then peaks, and then decreases. To test this hypothesis I have used a unique panel data set of spatial inequalities in 55 countries at different stages of economic development, covering the period 1980-2009. Parametric and semiparametric regressions are carried out using cross-section and (unbalanced) panel data. The results provide strong support for the existence of an inverted U, but importantly I also find spatial inequalities to increase again at very high levels of economic development. Although many factors may be contributing to this rise, one explanation rests on the process of tertiarization, i.e., the structural shift from industrial production towards a service base in the highest-developed economies.
regional inequality
Kuznets curve
panel data
semiparametric estimates
Document Type: 
Working Paper

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