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Regional Income Inequality lowers Life Satisfaction: Evidence from OECD Countries

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  • Kalenborn, Christine
  • Lessmann, Christian

Abstract

This paper analyzes the e ffect of regional income inequality within countries on individual life satisfaction. We use data from the World Values Survey (WVS) and the European Values Survey (EVS) containing approximately 97,000 observations from 1981-2008. Regional income inequality is measured by the coeffi cient of variation of regional GDP per capita. We find that higher regional income inequality leads to lower life satisfaction in OECD countries. In non-OECD countries, we find no signifi cant e ffect. This may be related to the higher dynamics of regional inequality in middle and low income countries, where people still hope to participate in income increases in the future, while regional inequality is persistent in high income countries.

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  • Kalenborn, Christine & Lessmann, Christian, 2014. "Regional Income Inequality lowers Life Satisfaction: Evidence from OECD Countries," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100561, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc14:100561
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    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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