Inequalities in Income and Education and Regional Economic Growth in Western Europe

Does inequality matter for regional growth? This paper addresses this question by using microeconomic data for more than 100,000 individuals over a period of 5 years from the European Community Household Panel (ECHP) dataset, complemented with Eurostat's Regio data, in order to examine the impact of income and educational distribution on regional economic growth. Educational distribution is measured in terms of educational achievement as well as educational inequality, and income distribution in terms of income per capita and income inequality, not only for the whole of the population, but also for normally working people. Our results indicate that, given existing levels of inequality, an increase in a region's income and educational inequality has a significant positive relationship with subsequent economic growth. Nevertheless, the reverse does not seem to be the case, as we do not find a causal link between growth and changes in inequality levels. Despite the fact that educational achievement is positively correlated with economic growth, the results also suggest that inequalities in income and educational attainment levels matter more for economic performance than average income and educational attainment, respectively. Initial income levels, in contrast, are irrelevant for regional economic growth as they are very sensitive to the inclusion of control variables.Income inequality, educational attainment, educational inequality, economic growth, regions, Europe/growth

Individual earnings and educational externalities in the European Union

This paper examines whether differences in educational externalities affect individual earnings across regions in the EU. Using microeconomic data from the European Community Household Panel, the analysis relies on spatial economic analysis in order to determine to what extent differences in individual earnings are the result of (a) the educational attainment of the individual, (b) the educational attainment of the other members of the household he/she lives in, (c) the educational endowment of the region where the individual lives, or (d) the educational endowment of the neighbouring regions. The results highlight that, in addition to the expected positive returns of personal educational attainment, place-based regional and supra-regional educational externalities generate significant pecuniary benefits for workers. These findings are robust to the inclusion of different individual, household, and regional control variables.individual earnings; educational attainment; externalities; households; regions; Europe

Welfare regimes and the incentives to work and get educated

This paper examines whether differences in welfare regimes shape the incentives to work and get educated. Using microeconomic data for more than 100,000 European individuals, the results show that welfare regimes make a difference for wages and education. First, people- and household-based effects (internal returns to education and household wage and education externalities) generate socioeconomic incentives for people to get an education and work, which are stronger in countries with the weakest welfare systems, i.e. those with what is known as 'Residual' welfare regimes (Greece, Italy, Spain and Portugal). Second, place-based effects, and more specifically differences in regional wage per capita and educational endowment and in regional interpersonal income and educational inequality, also influence wages and education in different ways across welfare regimes. Place-based effects have the greatest incidence in the Nordic Social-Democratic welfare systems. These results are robust to the inclusion of a large number of people- and place-based controls.education; employment; wages; welfare; regions; European Union

Education and Income Inequality in the Regions of the European Union

This paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel data set for 102 regions over the period 1995-2000, it analyses how microeconomic changes in human capital distribution affect income inequality not only for the whole of the population but also for normally working people. Human capital distribution is measured in terms of both educational attainment as well as educational inequality. Income and educational inequalities are calculated by a generalised entropy index (Theil index). Different static and dynamic panel data analyses are conducted in order to reduce measurement error on inequalities and minimise potential problems of omitted-variable bias. Taking into account the specification tests applied to the estimated models, the regression results reveal that, while the relationship between income inequality and income per capita is positive, the long-run relationship between income inequality and educational attainment is not statistically significant. This paper also agrees with the current belief that educational inequality has a positive relationship with income inequality. Across European regions high levels of inequality in educational attainment are associated with higher income inequality. This may be interpreted as the responsiveness of the EU labour market to differences in qualifications and skills. The above results are robust to the definition of income distribution. Other results indicate that population ageing and inactivity are sensitive to the specification model, while work access and latitude are negatively associated to income inequality. Urbanisation has a negative impact on inequality but for the whole of the population only. Furthermore, the relationship between unemployment and income inequality is positive. Female participation in the labour force is negatively associated with inequality and explains a major part of the variation in inequality. Finally, as expected, income inequality is lower in democratic welfare states, in Protestant areas, and in regions with Nordic family structures (i.e. Swedish and Danish regions).DYNREG, Income inequality, educational attainment, educational inequality, regions, Europe

Analysis of Educational Distribution in Europe: Educational Attainment and Inequality Within Regions

The aim of this paper is to visualise and describe the educational attainment and inequality distributions and to detect patterns of global and local spatial autocorrelation, using the European Community Household Panel dataset for 102 regions over the period 1995-2000. It investigates the space-time dynamics of the European educational distributions measured as education level completed and age when the highest education level was completed. This paper also highlights the importance of spatial interaction and geographical location in the human capital performance of the European regions. Without imposing any prior restrictive assumptions on distributions, the exploratory analysis shows that education is geographically autocorrelated due to knowledge and skill diffusion and to the guidelines for education systems and structures which are, as a general rule, set nationally. Thus not only geographical factors such as location, but also institutional ones matter for spatial dependence. The exploratory analysis of the European educational distribution also illustrates the systematic differences between urban and rural areas and between North and South regions. Economies within a cluster interact more with each other than with those outside. Educational attainment is higher in the North and in urban areas, while educational inequality is lower in these areas. Hence spatial dependence and spatial heterogeneity are indeed required features of the European educational analysis.DYNREG, educational attainment, educational inequality, Exploratory Spatial Data Analysis, regions, Europe, urbanisation, EU North-South divide.

Returns to Migration, Education, and Externalities in the European Union

Relatively little attention has been paid to the role that externalities play in determining the pecuniary returns to migration. This paper addresses this gap, using microeconomic data for more than 100,000 individuals living in the European Union (EU) for the period 1994-2001 in order to analyse whether the individual economic returns to education vary between migrants and nonmigrants and whether any observed differences in earnings between migrants and locals are affected by household and/or geographical (regional and interregional) externalities. The results point out that while education is a fundamental determinant of earnings., European labour markets – contrary to expectations – do not discriminate in the returns to education between migrants and non-migrants. The paper also finds that household, regional, and interregional externalities influence the economic returns to education, but that they do so in a similar way for local, intranational, and supra-national migrants. The results are robust to the introduction of a large number of individual, household, and regional controls.Individual Earnings, Migration, Educational Attainment, Externalities, Household, Regions, Europe

Education and income inequality in the regions of the European Union

This paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel data-set for 102 regions over the period 1995-2000, it analyses how micro-economic changes in human capital distribution affect income inequality for the population as a whole and for normally working people. The different static and dynamic panel data analyses conducted reveal that, while the relationship between income inequality and income per capita is positive, the relationship between income inequality and educational attainment is not clear. Across European regions high levels of inequality in educational attainment are associated with higher income inequality. This may be interpreted as the responsiveness of the EU labour market to differences in qualifications and skills. The above results are robust to changes in the definition of income distribution. Other results indicate that population ageing and inactivity are sensitive to the specification model, while work access and latitude are negatively associated to income inequality. Urbanisation has a negative impact on inequality, but for the population as a whole only, and the relationship between unemployment and income inequality is positive. Female participation in the labour force is negatively associated with inequality and explains a major part of the variation in inequality. Finally, income inequality is lower in social-democratic welfare states, in Protestant areas, and in regions with Nordic family structures.Income inequality; educational attainment; educational inequality; regions; Europe

Mapping the European regional educational distribution: Educational attainment and inequality

The geography of education, especially at sub-national level, is a huge black box. Basically nothing is known about the distribution of educational attainment and inequality across regions in Europe. This paper addresses this gap in the literature by mapping educational attainment and inequality in 102 regions in western Europe, using data extracted from the European Community Household Panel (ECHP) covering more than 100,000 individuals over the period 1995-2000. The results of this Exploratory Spatial Data Analysis (ESDA) reveal a strong correlation between levels of educational attainment and inequality across regions in Europe. Regions with similar educational conditions tend to cluster, often within national borders. In addition a North-South and an urban-rural dimension is evident. Northern regions and large European metropoli have not only the most educated labour force, but also the lowest levels of inequality. Educational inequality seems to be, in any case, a fundamentally within region phenomenon. 90 percent of the educational inequality in Europe takes place among individuals living in the same region.educational attainment; educational inequality; regions; exploratory spatial data analysis; Europe; urbanisation; EU North-South divide

Did decentralisation affect citizens' perception of the European Union? The impact during the height of decentralisation in Europe

The aim of this paper is to assess the extent to which different levels of decentralisation across regions of the European Union (EU) affected citizens' perceptions about European integration over the period 1973-2002. The paper uses Eurobarometer Surveys to explore by means of multinomial logistic regressions whether decentralisation was an important factor behind the varying perceptions about Europe. Two dimensions of decentralization-political and fiscal-are considered in the analysis, alongside several compositional and contextual effects. The results of the analysis show that fiscal decentralisation was fundamental for citizens' support for European integration, while there is limited evidence that political decentralisation played a similar role. Hence, while fiscal decentralisation may have given prominence to the economic benefits of European integration, political decentralisation was more associated with its economic costs. Taking into account that history matters, this paper raises potentially interesting insights for the design of policies aimed at promoting social cohesion