Intraregional Spatial Inequalities and Regional Income Level in the European Union Beyond the Inverted-U Hypothesis

• Published in: International regional science review Vol. 39; no. 3; pp. 291 - 317
• Main Authors: Artelaris, Panagiotis, Petrakos, George
• Format: Journal Article
• Language: English
• Published: Los Angeles, CA SAGE Publications 01-07-2016; Sage Publications Ltd
• Subjects: Econometrics; Hypotheses; Income inequality; Inequality; Studies; Europe; regional income level; inverted-U hypothesis; spatial econometrics; European Union; intraregional spatial inequalities
• ISSN: 0160-0176; 1552-6925
• DOI: 10.1177/0160017614532652

The aim of the article is to examine, for the first time to our knowledge, the relationship between the intraregional spatial inequality and the regional income level in the European Union (EU)-27 regions, in the context of the inverted-U hypothesis. Although this hypothesis might exist not only at the intranational but also at the intraregional level, the empirical consideration of the latter has been largely ignored. This is quite surprising because intraregional inequality is a very important issue in regional science literature. The results of the article establish a strong empirical relationship that contradicts the conventional wisdom. In other words, the results imply a U-shaped rather than an inverted U-shaped curve, raising doubts about the adequacy and interpretative power of this hypothesis. Moreover, the acknowledgment of the importance of intraregional inequality in the EU, the empirical evidence of spatial effects in intraregional spatial inequality, and the possibility of a trade-off between the regional income level and intraregional inequalities constitute other important contributions of this article, deriving major economic and political implications. The evidence presented in this article can be used as a building block for future theoretical and empirical work.