Top

The Annals of Regional Science

Published in:

04-09-2024 | Special Issue Paper

Cohesion policy and household income inequality: evidence from the Greek regions

Authors: Yannis Psycharis, Vassilis Tselios, Panagiotis Pantazis

Published in: The Annals of Regional Science | Issue 4/2024

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

This paper sets out to examine whether cohesion policy is associated to a reduction of household income inequality within the Greek regions. The analysis is built upon a unique database, which includes two types of data sources: public investment expenditures data along with household declared income data at the NUTS III geographical level in Greece. The results indicate that an increase in public investment expenditures is associated with an increase in income inequality, and this finding is more attributable to the EU co-financed than the nationally funded public investment projects. Nevertheless, the results are sensitive to the type/category of spending; there is evidence that “education and research” co-financed projects and the national “miscellaneous” expenditures, which include small-scale fiscal support to places, communities and associations, generate more egalitarian benefits among households across regions. These findings of this paper call for a readjustment and targeting of the cohesion policy to promote people-centered, along with place-specific, policies with the creation of more job opportunities and higher earnings for low-income households.

previous article The role of labor discrimination in spatial sorting: the USA as an example of ethnic groups staying apart

next article Strengths and weaknesses of EU regional reactivity to shocks

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 390 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Maschinenbau + Werkstoffe

Jetzt Wissensvorsprung sichern!

inform now

Available only for authorised users

The inclusion of these control variables is based on the theoretical literature review, the existing empirical studies and the data availability. There is strong evidence that income inequality within regions is associated with regional economic development (Rodríguez-Pose and Tselios 2009b; Castells-Quintana et al. 2015). Population density, which is a proxy for urbanization, is related with household income inequality as it reflects the choices of more and less skilled people to live together in particular urban (i.e., high density) areas (Glaeser et al. 2009). Income inequality is associated with the sectoral composition due to the differences in between-sector earnings. We also have data for human capital (measured by the percentage of University graduates to total population, Population Census 2011) in 2011 only. However, human capital is highly correlated with population density.

The 2000–2006 and the 2007–2013 programming periods.

For example, Erdem et al. (2019) find that people living in Dutch municipalities with the highest income inequality reported higher psychological distress compared to those living in municipalities with the lowest income inequality.

The correlation coefficient between income inequality and national public investment expenditures is 0.1978, and the correlation coefficient between income inequality and co-financed public investment expenditures is 0.1394.

Ahluwalia MS (1976) Inequality, poverty and development. J Dev Econ 3(4):307–342. https://doi.org/10.1016/0304-3878(76)90027-4CrossRef

Albanese G, Barone G, de Blasio G (2023) The impact of place-based policies on interpersonal income inequality. Economica 90(358):508–530. https://doi.org/10.1111/ecca.12465CrossRef

Allison PD (1978) Measures of inequality. Am Sociol Rev 43(6):865–880. https://doi.org/10.2307/2094626CrossRef

Artelaris P (2022) The economic geography of European Union’s discontent: lessons from Greece. Eur Urban Reg Stud 29(4):479–497. https://doi.org/10.1177/09697764221101742CrossRef

Artelaris P, Tsirbas Y (2018) Anti-austerity voting in an era of economic crisis: regional evidence from the 2015 referendum in Greece. Environ Plan C 36(4):589–608. https://doi.org/10.1177/2399654418765186CrossRef

Atkinson A (1997) Bringing income distribution in from the cold. Econ J 107(441):297–321. https://doi.org/10.1111/j.0013-0133.1997.159.xCrossRef

Baltagi BH (2005) Econometric analysis of panel data. John Wiley, Chichester

Bartik T (2020) Targeting jobs toward the people who need them. J Policy Anal Manage 39(3):854–856. https://doi.org/10.1002/pam.22226CrossRef

Bartik TJ (1991) Who benefits from state and local economic development policies? W.E. Upjohn Institute. http://www.jstor.org/stable/j.ctvh4zh1q

Becker SO, Egger PH, von Ehrlich M (2019) Effects of EU regional policy: 1989–2013. Reg Sci Urban Econ 69:143–152. https://doi.org/10.1016/j.regsciurbeco.2017.12.001CrossRef

Breau S, Lee A (2023) The evolution of the Kuznets curve in Canada. Pap Reg Sci 102(4):709–735. https://doi.org/10.1111/pirs.12737CrossRef

Castells-Quintana D, Ramos R, Royuela V (2015) Income inequality in European regions: recent trends and determinants. Rev Reg Res 35:123–146. https://doi.org/10.1007/s10037-015-0098-4CrossRef

Checchi D (2000) Does educational achievement help to explain income inequality? Departmental Working Papers 2000-11. Department of Economics, University of Milan, Italy

Crescenzi R, Giua M (2020) One or many Cohesion Policies of the European Union? On the differential economic impacts of cohesion policy across member states. Reg Stud 54(6):10–20. https://doi.org/10.1080/00343404.2019.1665174CrossRef

Crescenzi R, Fratesi U, Monastiriotis V (2020) Back to the member states? Cohesion Policy and the national challenges to the European Union. Reg Stud 54(1):5–9. https://doi.org/10.1080/00343404.2019.1662895CrossRef

Crucitti F, Lazarou N-J, Monfort Ph, Salotti S (2023) The impact of the 2014–2020 European structural funds on territorial cohesion. Reg Stud. https://doi.org/10.1080/00343404.2023.2243989CrossRef

Dall’Erba S, Fang F (2017) Meta-analysis of the impact of European Union structural funds on regional growth. Reg Stud 51(6):822–832. https://doi.org/10.1080/00343404.2015.1100285CrossRef

Di Cataldo M, Rodríguez-Pose A (2017) What drives employment growth and social inclusion in the regions of the European Union? Reg Stud 51(12):1840–1859. https://doi.org/10.1080/00343404.2016.1255320CrossRef

Diemer A, Iammarino S, Rodrıguez-Pose A, Storper M (2022) The regional development trap in Europe. Econ Geogr 98(5):487–509. https://doi.org/10.1080/00130095.2022.2080655CrossRef

Dijkstra L, Poelman H, Rodríguez-Pose A (2020) The geography of EU discontent. Reg Stud 54(6):737–753. https://doi.org/10.1080/00343404.2019.1654603CrossRef

Durlauf SN, Quah DT (1999) The new empirics of economic growth. In: Taylor JB, Woodford M (eds) Handbook of macroeconomics. Elsevier, Amsterdam, pp 555–677

Erdem Ö, van Lenthe FJ, Burdorf A (2019) Income inequality and psychological distress at neighbourhood and municipality level: an analysis in the Netherlands. Health Place 56:1–8. https://doi.org/10.1016/j.healthplace.2018.12.011CrossRef

Eva M, Cehan A, Corodescu-Roșca E, Bourdin S (2022) Spatial patterns of regional inequalities: empirical evidence from a large panel of countries. Appl Geogr 140:102638. https://doi.org/10.1016/j.apgeog.2022.102638CrossRef

Ferraro A, Cerciello M, Agovino M, Garofalo A (2021) Do public policies reduce social exclusion? The role of national and supranational economic tools. Struct Chang Econ Dyn 57:165–181. https://doi.org/10.1016/j.strueco.2021.03.001CrossRef

Fiaschi D, Lavezzi AM, Parenti A (2018) Does EU cohesion policy work? Theory and evidence. J Reg Sci 58(2):386–423. https://doi.org/10.1111/jors.12364CrossRef

Fiaschi D, Lavezzi AM, Parenti A (2019) Deep and proximate determinants of the world income distribution. Rev Income Wealth 66(3):677–710. https://doi.org/10.1111/roiw.12418CrossRef

Firebaugh G (2003) The new geography of global income inequality. Harvard University Press

Gastwirth JL (2017) Is the Gini index of inequality overly sensitive to changes in the middle of the income distribution? Stat Public Policy 4(1):1–11. https://doi.org/10.1080/2330443X.2017.1360813CrossRef

Gaubert C, Vergara D, Yagan D (2021) Trends in U.S. spatial inequality: concentrating affluence and a democratization of poverty. In: AEA papers and proceedings, pp 520–525

Glaeser EL, Resseger M, Tobio K (2009) Inequalities in cities. J Reg Sci 49(4):617–646. https://doi.org/10.1111/j.1467-9787.2009.00627.xCrossRef

Hsiao C (2003) Analysis of panel data. Cambridge University Press, CambridgeCrossRef

Kline P, Moretti E (2014) People, places and public policy: some simple welfare economics of local economic development programs. Annu Rev Econ 6:629–662. https://doi.org/10.1146/annurev-economics-080213-041024CrossRef

Lang V, Redeker N, Bischoff D (2022) Place-based policies and inequality within regions, OSF Pre-print. https://doi.org/10.31219/osf.io/2xmzj

Mairesse J (1990) Time-series and cross-sectional estimates on panel data:why are they different and why they should be equal. In: Hartog J, Ridder G, Theeuwes J (eds) Panel data and labor market studies. North Holland, New York, pp 81–95

Mogila Z, Miklošovič T, Lichner I, Radvanský M, Zaleski J (2022) Does Cohesion policy help to combat intra-country regional disparities? A perspective on Central European countries. Reg Stud 56(10):1783–1795. https://doi.org/10.1080/00343404.2022.2037541CrossRef

Mohl P, Hagen T (2010) Do EU structural funds promote regional growth? New evidence from various panel data approaches. Reg Sci Urban Econ 40(5):353–365. https://doi.org/10.1016/j.regsciurbeco.2010.03.005CrossRef

Moretti E (2022) Place-based policies and geographical inequalities, IFS Deaton review of inequalities. https://ifs.org.uk/inequality/place-based-policies-and-geographical-inequalities/

Motonishi T (2006) Why has income inequality in Thailand increased? An analysis using surveys from 1975 to 1998. Jpn World Econ 18(4):464–487. https://doi.org/10.1016/j.japwor.2004.11.003CrossRef

Percoco M (2016) Impact of European Cohesion Policy on regional growth: Does local economic structure matter? Reg Stud 51(6):833–843. https://doi.org/10.1080/00343404.2016.1213382CrossRef

Perez SA, Matsaganis M (2018) The political economy of austerity in Southern Europe. New Polit Econ 23(2):192–207. https://doi.org/10.1080/13563467.2017.1370445CrossRef

Pike A, Béal V, Cauchi-Duval N, Franklin R, Kinossian N, Lang T, Leibert T et al (2023) Left behind places: a geographical etymology. Reg Stud 58(6):1167–1179. https://doi.org/10.1080/00343404.2023.2167972CrossRef

Piketty T (2014) Capital in the twenty-first century. Harvard University PressCrossRef

Psycharis Y, Tselios V, Pantazis P (2020) The contribution of Cohesion funds and nationally funded public investment to regional growth: evidence from Greece. Reg Stud 54(1):95–105. https://doi.org/10.1080/00343404.2018.1525696CrossRef

Psycharis Y, Panori A, Athanasopoulos D (2022) Public investment and regional resilience: empirical evidence from the Greek Regions. Tijdschr Econ Soc Geogr 113:57–79. https://doi.org/10.1111/tesg.12499CrossRef

Psycharis Y, Tselios V, Pantazis P (2023) The geographical dimension of income inequality in Greece: evolution and the ‘turning point’ after the economic crisis. Reg Stud Reg Sci 10(1):798–819. https://doi.org/10.1080/21681376.2023.2261523CrossRef

Puga D (1999) The rise and fall of regional inequalities. Eur Econ Rev 43(2):303–324. https://doi.org/10.1016/S0014-2921(98)00061-0CrossRef

Rey SJ (2018) Bells in space: the spatial dynamics of US interpersonal and interregional income inequality. Int Reg Sci Rev 41(2):152–182. https://doi.org/10.1177/0160017615614899CrossRef

Rey SJ (2001) Spatial analysis of regional income inequality. urban/regional 0110002. University Library of Munich, Germany

Rodríguez-Pose A (2018) The revenge of the places that don’t matter (and what to do about it). Camb J Reg Econ Soc 11(1):189–209. https://doi.org/10.1093/cjres/rsx024CrossRef

Rodríguez-Pose A, Tselios V (2009a) Education and income inequality in the regions of the European Union. J Reg Sci 49(3):411–437. https://doi.org/10.1111/j.1467-9787.2008.00602.xCrossRef

Rodríguez-Pose A, Tselios V (2009b) Mapping regional personal income distribution in Western Europe: income per capita and inequality. Czech J Econ Finance 59(1):41–70

Rodríguez-Pose A, Tselios V (2012) Individual earnings and educational externalities in the European Union. Reg Stud 46(1):39–57. https://doi.org/10.1080/00343404.2010.485351CrossRef

Rodríguez-Pose A, Psycharis Y, Tselios V (2012) Public investment and regional growth and convergence: evidence from Greece. Pap Reg Sci 91:543–568. https://doi.org/10.1111/j.1435-5957.2012.00444.xCrossRef

Rodriguez-Pose A, Davila T, Lee N (2023) Left-behind versus unequal places:interpersonal inequality, economic decline and the rise of populism in the USA and Europe. J Econ Geogr 23(5):951–977. https://doi.org/10.1093/jeg/lbad005CrossRef

Sotiriou A, Tsiapa M (2015) The asymmetric influence of structural funds on regional growth in Greece. Environ Plan C 33:863–881. https://doi.org/10.1177/0263774X15603905CrossRef

Stiglitz JE (2012) The price of inequality. W.W. Norton, New York

Tam Mo-Yin S, Zhang R (1996) Ranking income distributions: the tradeoff between efficiency and equality. Economica 63:239–252. https://doi.org/10.2307/2554761CrossRef

Tselios V (2009) Growth and convergence in income per capita and income inequality in the regions of the EU. Spat Econ Anal 4(3):343–370. https://doi.org/10.1080/17421770903114711CrossRef

Tselios V, Rovolis A, Psycharis Y (2017) Regional economic development, human capital and transport infrastructure in Greece: the role of geography. In: Madalena F, Ugo F (eds) Regional upgrading in Southern Europe: spatial disparities and human capital. Springer, Berlin-Heidelberg

World Bank (2002) Achieving education for all by 2015: simulation results for 47 low-income countries. Human Development Network, Africa Region and Education Department, World Bank, Washington DC, 76

Title: Cohesion policy and household income inequality: evidence from the Greek regions
Authors: Yannis Psycharis
Vassilis Tselios
Panagiotis Pantazis
Publication date: 04-09-2024
Publisher: Springer Berlin Heidelberg
Published in: The Annals of Regional Science / Issue 4/2024
Print ISSN: 0570-1864
Electronic ISSN: 1432-0592
DOI: https://doi.org/10.1007/s00168-024-01304-y

Kin networks and quality of government: a regional analysis

Open Access
Original Paper

Towards a double bell theory of regional disparities

Open Access
Special Issue Paper

Strengths and weaknesses of EU regional reactivity to shocks

Open Access
Special Issue Paper

Structural change in city systems evolution

Open Access
Special Issue Paper

Can air traffic booms induce innovation and bridge regional innovation gaps?

Open Access
Special Issue Paper

Political trust and economic development in European regions

Open Access
Original Paper