Spatial inequality, geography and economic activity

Sandra Achten and Christian Lessmann

No 7547, CESifo Working Paper Series from CESifo

Abstract: We study the effect of spatial inequality on economic activity. Given that the relationship is highly simultaneous in nature, we use exogenous variation in geographic features to construct an instrument for spatial inequality, which is independent from any man-made factors. Inequality measures and instruments are calculated based on grid-level data for existing countries as well as for artificial countries. In the construction of the instrumental variable, we use both a parametric regression analysis as well as a random forest classification algorithm. Our IV regressions show a significant negative relationship between spatial inequality and economic activity. This result holds if we control for country-level averages of different geographic variables. Therefore, we conclude that geographic heterogeneity is an important determinant of economic activity.

Keywords: regional inequality; spatial inequality; economic activity; development; geography; machine learning (search for similar items in EconPapers)
JEL-codes: O15 R12 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-big, nep-cmp, nep-geo, nep-gro and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp7547.pdf (application/pdf)

Related works:
Journal Article: Spatial inequality, geography and economic activity (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7547

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().