The inequality-growth link revisited with spatial considerations: the case of provinces in the Philippines

Abstract

AbstractThis study revisits the relationship between income inequality and economic growth using provincial-level data from the Philippines over a ten-year period (1991–2000). This study demonstrates that the magnitude and significance of the inequality-growth relationship is not stable across space and the magnitude can be overestimated when spatial considerations are excluded from analysis. Generally, existing literature on the relationship between income inequality and economic growth has largely overlooked spatial elements. To avoid this exclusion, geographically weighted regression (GWR) estimates were used in this study. Results using GWR showed the magnitude of the inequality-growth relationship varied over a range of 0.70–0.85. The results of this study reinforce the idea that previous studies that have excluded spatial variation have likely overestimated the inequality-growth relationship, particularly in differences between urban and rural provinces