Keywords and classification

Income Inequality, Regional Inequality, Spatial Dependence, Spatial Autoregressive Model
JEL C21, D31, J31

Key Questions

• How is income distributed regionally in Austria?

• Which municipalities show high levels of income inequality?

• What is the nexus between inequality and growth?

Key Findings

• Higher average income is correlated with higher inequality

• Inequality in Austria can be characterized as geographically concentrated

• Not everyone profits equally from rising income levels

Abstract

The income–inequality nexus in a developed country: small-scale regional evidence from Austria, Regional Studies. This paper analyses the relationship between regional inequality and average income in a small-scale framework for Austria. The empirical findings are based on a novel inequality database generated from individual wage tax information at the municipality level. This study researches the magnitude of regional spillovers of income and inequality using spatial econometric methods. The results show a pronounced positive relation between regional income levels and inequality, where especially high-income municipalities exhibit a large spread in the income distribution. Furthermore, it shows that higher levels of inequality are associated with income gains at the top of the distribution.