This paper provides an empirical study of the determinants of income inequality across regions of the EU. Using the European Community Household Panel dataset for 102 regions over the period 1995-2000, it analyses how microeconomic changes in human capital distribution affect income inequality for the population as a whole and for normally working people. The different static and dynamic panel data analyses conducted reveal that the relationship between income per capita and income inequality, as well as between a good human capital endowment and income inequality is positive. High levels of inequality in educational attainment are also associated with higher income inequality. The above results are robust to changes in the definition of income distribution and may be interpreted as a sign of the responsiveness of the EU labor market to differences in qualifications and skills. Other results indicate that population ageing, female participation in the labor force, urbanization, agriculture, and industry are negatively associated to income inequality, while unemployment and the presence of a strong financial sector positively affect inequality. Finally, income inequality is lower in social-democratic welfare states, in Protestant areas, and in regions with Nordic family structures.

Devolution can have incongruous effects on equality. Decentralisation of powers and resources to lower tiers of government can either increase or reduce interpersonal inequalities, depending on characteristics of the devolved region. This column uses data from regions of Western Europe to show that greater fiscal decentralisation is associated with lower income inequality. Devolution is a global trend, advocated by international organisations, including both the World Bank and the OECD, as a mechanism for achieving local prosperity. Decentralisation of powers and resources to lower tiers of government can-under different circumstances and in different contextscontribute to both an increase and a reduction interpersonal inequalities. Decentralisation can reduce interpersonal inequalities by: Exploiting the information advantage over central government and increasing the degree of efficiency in the allocation of resources, better matching to the preferences of local citizens. Bringing government closer to the people and providing better information about local preferences to inform the optimal mix of local policies. Promoting greater voice, transparency, and participation through enhanced accountability to local citizens. Limiting the opportunities for corruption and interest-group capture of the returns of public policies through greater transparency and accountability. Conversely, decentralisation can increase interpersonal inequalities in the following ways: It weakens the capacity of central government to play an equalising role to achieve a balanced distribution of income through social and territorial transfers from the rich to the poor. Diversity and variation in the availability and quality of public services between places generates unequal individual access and provision, regardless of preferences-in England, for instance, this is the so-called 'postcode-lottery' issue.

After a decade of devolution and amid uncertainties about its effects, it is timely to assess and reflect upon the evidence and enduring meaning of any 'economic dividend' of devolution in the UK. Taking a multi-disciplinary approach utilising institutionalist and quantitative methods, this paper seeks to discern the nature and extent of any 'economic dividend' through a conceptual and empirical analysis of the relationships between spatial disparities, spatial economic policy and decentralisation. Situating the UK experience within the historical context of its evolving geographical political economy, we find: i) a varied and uneven nature of the relationships between regional disparities, spatial economic policy and decentralisation that change direction during specific time periods; ii) the role of national economic growth is pivotal in explaining spatial disparities and the nature and extent of their relationship with the particular forms of spatial economic policy and decentralisation deployed; and, iii) there is limited evidence that any 'economic dividend' of devolution has emerged but this remains difficult to discern because its likely effects are over-ridden by the role of national economic growth in decisively shaping the pattern of spatial disparities and in determining the scope and effects of spatial economic policy and decentralisation.

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The neoclassical growth model predicts that there will be both a reduction of income per capita disparities over time and long-term convergence in income inequality levels. This paper examines whether this holds true for the EU using data from the European Community Household Panel for 102 regions over the period 1995–2000. The analysis is conducted using cross-sectional and panel data growth models with spatial interaction effects. The results reveal the presence of a conditional convergence in income per capita after controlling for educational attainment, unemployment, sectoral composition, spatially lagged growth of income per capita, and regional fixed effects, and that of an unconditional convergence in income inequality. Expansion et convergence dans les revenus par habitant et inégalité des revenus dans les régions de l'UE RÉSUMÉ Le modèle de croissance néoclassique prévoit que l'on assistera, à terme, à une réduction des disparités entre les revenus par habitant, ainsi qu’à une convergence à long terme des disparités dans l'inégalité des revenus. La présente communication examine l'applicabilité éventuelle de ce modèle à l'UE, en utilisant des données de l'European Community Household Panel pour 102 régions, au cours de la période 1995–2000. On effectue cette analyse en utilisant des modèles de croissance transversaux et de commissions, avec des effets d'interaction spatiale: ses résultats révèlent l'existence d'une convergence des revenus par habitant, après avoir contrôlé les réalisations éducationnelles, la composition sectorielle, la croissance du retard spatial des revenus par habitant, ainsi que des effets régionaux fixes, ainsi que la présence d'une convergence inconditionnelle dans l'inégalité des revenus. Crecimiento y convergencia en ingresos per capita y desigualdad de ingresos en las regiones de la UE RÉSUMÉN El modelo neoclásico de crecimiento predice que con el tiempo se producirá una reducción de las disparidades en los ingresos per capita, así como una convergencia a largo plazo de los niveles de desigualdad de ingresos. Este trabajo examina la veracidad de este caso en la UE utilizando datos procedentes del European Community Household Panel aplicables a 102 regiones durante el período 1995–2000. El análisis se conduce utilizando modelos de crecimiento de datos transeccionales y de panel con efectos de interacción espacial. Los resultados revelan la presencia de una convergencia condicional en los ingresos per capita después de controlar el rendimiento educacional, desempleo, composición sectoral, crecimiento limitado espacialmente de los ingresos per capita y efectos regionales fijos, así como la presencia de una convergencia incondicional en la desigualdad de ingresos.Income inequality, convergence, spatial econometrics, Europe, C21, C23, O12, O52,