No abstract

This study builds on the fundamentals of the new economic geography and the skill-biased technological change argument, to empirically investigate whether increasing income/earning inequality enhances total factor productivity in South Africa. In so doing, panel data of district-municipalities and spatial econometric techniques are used for the period between 1995 and 2015, to gain a better understanding of the role of location and distance in the effects of income inequality on total factor productivity. The results from the analysis and empirical estimations indicate that: (1) there is strong support for the existence of positive spatial interactions in the effects of income inequality on total factor productivity; (2) the estimated direct effect of income inequality on TFP in local district-municipalities is negative and statistically significant, while the indirect effect is positive and statistically significant as well. These findings suggest that district-municipalities with moderate levels of inequality and high economic opportunities, attract more businesses, investments and important stocks of skilled labour from districtmunicipalities with high inequality. Furthermore, the finding of negative effects supports previous research suggesting that high levels of inequality set the stage for the adoption of distortionary policies which adversely influence the investment climate and produce political instability, thereby stifling the level of productivity and growth. Keywords Income inequality Á Total factor productivity Á Spatial econometric Á Spillover effects JEL classification C21 Á C23 Á D31 Á D62 Á O47

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use:Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public.If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

No abstract

No abstract