CHAPTER 3 REGIONAL DEVELOPMENT IN THE LIGHT OF INCOME INEQUALITY, ENTREPRENEURSHIP AND INNOVATION Emilia G. Marsellou,1 Vlassis Missos,2 Konstantinos Loizos 3 1
emarsellou@kepe.gr, 2 vmissos@kepe.gr, 3 kloizos@kepe.gr Centre of Planning & Economic Research
The relation between economic growth and income inequality is of growing interest to researchers and policy makers. Most existing studies have focused on supply-side factors determining economic growth and development (such as entrepreneurship, innovation, human capital, industrial specialization, etc.) and have overlooked demand-side determinants such as income inequality, although this is partly due to shortage of proper data, especially at the subnational level. The chapter utilizes a well-founded econometric growth model and introduces income inequality. The empirical assessment concerns EU (NUTS-2) regions during 2004-2016. For income inequality data we use the EUSILC database and we assign the inequality index from the EU-SILC territorial division to Eurostat’s NUTS-2 regional division. Our analysis also includes the impact of more traditional factors of economic growth such as innovation, human capital, entrepreneurship, and economic sector shares. We employ a dynamic panel model using the two-step system Generalized Methods of Moments developed by Arellano and Bover (1995) and Blundell and Bond (1998). Our findings suggest that the impact of income inequality on growth is negative and statistically significant in all model specifications. Innovation and human capital have positive statistically significant effects. Entrepreneurship, proxied by self-employment, has a negative sign, possibly because of the generality of the index used. ΑΒSTRACT
Emilia G. Marsellou, Vlassis Missos, Konstantinos Loizos
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