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Inequality and Economic Growth: Evidence from Argentina's provinces using Spatial Econometrics

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2008, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Development Economics.

This dissertation analyzes whether inequality in the distribution of income influences real per capita GDP growth in the provinces of Argentina, while taking into account spatial autocorrelation. The primary objective is to decouple this influence into within effects, the inequality from the own province, and spillover effects, the inequality from the neighboring provinces. These influences are examined in the long and short run.

The dissertation identifies significant clustering, with relatively high (low) income provinces located next to high (low) income provinces. The coefficient of variation of provincial per capita GDP and Moran I statistic for spatial autocorrelation suggest an interruption of the process of convergence among provinces during the 1990s, when rapid growth was followed by a major crisis and increasing inequality. Weaker clusters are identified for inequality. Following Partridge (2005), the dissertation first considers parsimonious models with a few key variables. Next, it adds several control variables, to get more fully specified base models and to explore spillover effects. To control for spatial autocorrelation, spatial lag and spatial error model specifications are used. Pooled OLS models with a fixed time effect and fixed- and random-effects panel specifications confirm the robustness of the results.

Income inequality might have a separate effect at the middle versus the tails of the distribution in the regressions, the provincial Gini coefficient controls for the overall distribution, especially at the tails, while the share of the third quintile controls for a potential middle-class consensus and role of the median voter.

The dissertation finds robust evidence that both the own province inequality and inequality in the neighboring provinces negatively affect per capita GDP growth in the provinces of Argentina for the 1991-2002 period. There is also robust evidence that the share of the third quintile negatively affects growth. This result is not consistent with hypotheses about the vibrancy of the middle class; rather, it reflects political economy influences, where the rent seeking and other unproductive activities of the middle class, in response to distorting redistribution policies and social and political conflict generated by differences in inequality across provinces, inhibit growth.

Claudio Gonzalez-Vega, PhD (Advisor)
Mark Partridge, PhD (Committee Member)
Joseph Kaboski, PhD (Committee Member)
275 p.

Recommended Citations

Citations

  • Canadas, A. (2008). Inequality and Economic Growth: Evidence from Argentina's provinces using Spatial Econometrics [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1211944935

    APA Style (7th edition)

  • Canadas, Alejandro. Inequality and Economic Growth: Evidence from Argentina's provinces using Spatial Econometrics. 2008. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1211944935.

    MLA Style (8th edition)

  • Canadas, Alejandro. "Inequality and Economic Growth: Evidence from Argentina's provinces using Spatial Econometrics." Doctoral dissertation, Ohio State University, 2008. http://rave.ohiolink.edu/etdc/view?acc_num=osu1211944935

    Chicago Manual of Style (17th edition)