Title: "The Drivers of Inequality Across European Regions"

Date Friday 16 February 2018
Venue Heriot-Watt, Room MB1.62
Time 3.15pm

Speaker: Davide Fiaschi (University of Pisa) – joint work with Lisa Gianmoena and Angela Parenti

Abstract:

This paper analyses the sources of inequality in terms of GDP per worker looking at a large sample of European regions. A dynamic extension of the Moran scatter plot, consisting in a non-parametric estimate of the joint dynamics of GDP per worker and its spatial lag, suggests the emergence of three spatial clubs: one populated by regions belonging to the former Eastern Bloc countries, one by regions of PIGS countries (Portugal, Italy, Greece and Spain) and the last one by regions of other EU countries (notably Germany, France, UK and Northern Europe countries). To estimate the drivers of this type of inequality of the GDP per worker across European regions, we propose a spatial growth model and we estimate it using a spatial fixed panel in a sample of 254 NUTS2 regions over the period 1991-2008. Interregional technological spill-overs appear to play a key role in European regional inequality, in particular on the emergence of three main spatial clubs of regions. Estimated unobserved heterogeneity (fixed effects) also explains an important share of inequality; regional differences in informal institutions, as trust and obedience suggested by Tabellini (2010), have explanatory power on the estimated unobserved heterogeneity, but they explain only a very limited part of the variance of the estimated unobserved heterogeneity. Finally, cross-region heterogeneity in human capital appear to exert a negligible role on European regional inequality.