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Is Inequality Good for Innovation?

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  • Vassilis Tselios

    (Centre for Urban and Regional Development Studies (CURDS), University of Newcastle upon Tyne, UK, Spatial Economics Research Centre (SERC), London School of Economics, London, UK, v.tselios@ncl.ac.uk)

Abstract

Is inequality good for innovation? This article addresses this question, using aggregated microeconomic data for 102 regions over the period 1995—2000 from the European Community Household Panel (ECHP) data set, complemented with Eurostat’s Regio data. Static and dynamic panel data specifications and Granger causality tests for panel data are used to assess the relationship between patents, included as a proxy for innovation and income inequality. The results indicate that, given existing levels of income inequality in European Union (EU), an increase in a region’s inequality favors innovation. In addition, geographic space is a key factor in explaining the heterogeneous association between innovation and inequality, and innovation is characterized by circular, cumulative, and intraregional spillover effects. The above findings are robust to changes in the definition of income distribution and across inequality measurements.

Suggested Citation

  • Vassilis Tselios, 2011. "Is Inequality Good for Innovation?," International Regional Science Review, , vol. 34(1), pages 75-101, January.
    • Handle: RePEc:sae:inrsre:v:34:y:2011:i:1:p:75-101
    DOI: 10.1177/0160017610383278
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    Cited by:

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    2. Vassilis Tselios, 2014. "The Granger-causality between income and educational inequality: a spatial cross-regressive VAR framework," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 221-243, August.
    3. Lee, Sangwon & Nam, Yoonjae & Lee, Seonmi & Son, Hyunjung, 2016. "Determinants of ICT innovations: A cross-country empirical study," Technological Forecasting and Social Change, Elsevier, vol. 110(C), pages 71-77.
    4. Kjell Hausken & John F. Moxnes, 2019. "Innovation, Development and National Indices," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(3), pages 1165-1188, February.
    5. Ugur, Mehmet, 2012. "Market Power, Governance and Innovation: OECD Evidence," MPRA Paper 44141, University Library of Munich, Germany.
    6. Benos, Nikos & Tsiachtsiras, Georgios, 2019. "Innovation and Income Inequality: World Evidence," MPRA Paper 92050, University Library of Munich, Germany.

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