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The analysis of income inequality and top-income earners at the local level. A spatial economic approach applied to Spain

16th National Competition for Economic Research Grants

Public economics

Senior Researcher : Miriam Hortas Rico

Research Centre or Institution : Universidad Autónoma de Madrid.

Abstrac

The aim of this project is to analyze inequality from a local perspective, paying special attention to its main drivers and consequences, using innovative spatial econometric modelling techniques and a large and innovative database of income distributions.

A first study quantifies the relative importance of the set of potential causes of municipal inequality, taking into account that inequality is strongly correlated in both time and space. The results allow us to identify a group of robust determinants of local income inequality: human capital, economic factors (including per capita income, sectoral composition of employment and average cadastral value of housing) and, to a lesser extent, the level of regional public spending and corruption.

A second study investigates how inequality shapes political participation, and to what extent this relationship is modulated by the spatial patterns of political competition. To this end, we develop a theoretical model where inequality is important for electoral participation, mainly because it influences the incentives of elites to mobilize voters according to their income level through political strategies. The results confirm that, in contexts of high inequality, the resort to clientelism as a mobilization strategy increases the provision of specific public goods for low-income voters, which, in turn, translates into higher levels of electoral participation.

A third study analyzes the determinants of spatial heterogeneity observed in the use of alternative sources of local funding (tax collection or inter-governmental transfers) and their
stimulating effect on public spending, and how inequality influences this process. The results confirm that, given the proportionality of the property tax (the main tax instrument at the local level), an increase in income inequality characterized by a higher proportion of poor people in the jurisdiction increases the tax burden borne by the majority of voters. Consequently, taxation becomes a less attractive source of financing for the jurisdiction from the point of view of the preferences of the majority of voters, thus favoring the use of transfers as an alternative source of financing, and its greater stimulatory effect on public expenditure.

 

Scientific Production
 
Magazine Articles 3
Communications at national conferences 1
Communications at international conferences -

 

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