Is income inequality converging at the regional level? Evidence from LIS data

Abstract

Abstract Interest in regional convergence in mean incomes has been rekindled by findings that suggest a shift from convergence to divergence. While the majority of existing research has explored convergence in mean incomes, this research focuses specifically on the convergence/divergence of interpersonal income distributions across regions, referred to throughout the study as comparative inter-regional inter-personal income distributions (CIRIPID). The findings suggest that CIRIPID, as measured by the Gini coefficient, converge across countries, but that heterogenous trends are visible within countries. The results highlight that in some countries regions are becoming equally more unequal, while others see regional Gini coefficients trend towards a lower level of inequality. The study also explores the impact of systems of government on CIRIPID. In addition, the study draws on the convergence club methodology to identify heterogeneous CIRIPID convergence paths within countries.