Income Differences in Regions of Latvia – Problems and Challenges

Abstract

Income differences in regions of Latvia is becoming a greater problem for families as there are made decisions for emigration, for municipalities as there are significant reductions in tax (income and property) payers and for entrepreneurs as there are less customers for their products and services: those aspects are on great importance but not enough researched and discussed in academic research.
 Purpose of the study is to analyse income differences in the regions of Latvia.
 The tasks of the study:
 1) to review theoretical background of income differences in context of regional development;
 2) to review existing research of income differences in the regions in EU;
 3) to analyse problems of income indifferences in the regions of Latvia.
 Research methods used in preparation of the paper: scientific publication and previous conducted research results analysis, analysis of EU-SILC results (in 2014-2017) and European Central Bank conducted survey on Household income and expenses survey results, results are compared with the results of other Eurozone countries. Survey results are analysed using indicators of descriptive statistics (indicators of central tendency or location - arithmetic mean, mode, median), indicators of variability (indicators of dispersion - range, standard deviation and standard error of mean), cross-tabulations for regions in Latvia, for household members, for urban – rural living and analysis of variance - ANOVA are used. The results of analysis have indicated different challenges for decision makers on different levels.

A systematic literature review on the rural-urban well-being gap in Europe

“…Indeed, growing food and raising animals is a very common activity in rural areas of low-income countries, which helps to mitigate the existing income gap. Therefore, urban-rural differences in the poorest countries are lower than what one would expect observing the only monetary income differences (Alexandri et al, 2015;Bock et al, 2015;Chivu et al, 2015;Grzega, 2019;Rodríguez-Pose & Tselios, 2009;Schnorr-Baecker, 2021;Shucksmith et al, 2006Shucksmith et al, , 2009Sloka et al, 2019;Stanef, 2012). Furthermore, as reported by Stanef (2012), the growing importance of extra-agricultural revenue in rural families is reducing the income gap between rural and urban areas.…”

“…In general, in Europe, the analyzed studies have highlighted a lower income situation in rural areas than in urban areas (Alexandri et al, 2015;Bock et al, 2015;Chivu et al, 2015;Grzega, 2019;Rodríguez-Pose & Tselios, 2009;Schnorr-Baecker, 2021;Shucksmith et al, 2006Shucksmith et al, , 2009Sloka et al, 2019;Stanef, 2012). What has been observed in recent years in Europe is a convergence between the two groups, characterized by a notable growth in rural areas and a less sudden growth in urban areas (Grzega, 2019;Wochner & Holzhausen, 2019).…”

“…Furthermore, income differences between urban and rural areas change according to the wealth of the country of reference. In fact, urban-rural income differences are mild in the richest countries and most progressively marked in countries with a lower average income (Alexandri et al, 2015;Bock et al, 2015;Chivu et al, 2015;Grzega, 2019;Rodríguez-Pose & Tselios, 2009;Schnorr-Baecker, 2021;Shucksmith et al, 2006Shucksmith et al, , 2009Sloka et al, 2019;Stanef, 2012). Therefore, there is evidence that the income gap of rural areas compared to urban ones decreases as the country's average income increases.…”

“…Housing is one of the key dimensions of an individual's material location and quality of life, in both rural and urban Europe (Alexandri et al, 2015;Bock et al, 2015;Chivu et al, 2015;Grzega, 2019;Rodríguez-Pose & Tselios, 2009;Schnorr-Baecker, 2021;Shucksmith et al, 2006Shucksmith et al, , 2009Sloka et al, 2019;Stanef, 2012). Housing problems are more severe in poorer European countries, in the sense that dwelling sizes, housing conditions and facilities are much worse, although levels of housing satisfaction do not differ significantly.…”

“…In richer countries, unemployment in urban areas is higher than in rural areas, while in lower-income countries, where unemployment is higher, it is more of a rural phenomenon (Alexandri et al, 2015;Bock et al, 2015;Chivu et al, 2015;Grzega, 2019;Rodríguez-Pose & Tselios, 2009;Schnorr-Baecker, 2021;Shucksmith et al, 2006Shucksmith et al, , 2009Sloka et al, 2019;Stanef, 2012). The contention that rural areas have shared the shift to a service-based economy is not confirmed across enlarged Europe, except in the richest countries where most rural respondents work in white-collar and managerial occupations.…”