Isolating Neighborhood Components of Regional Inequality

Abstract

Regional disparities have been measured mainly using a variety of concentration statistics applied to spatial data. This article modifies a factor decomposition of the Theil index of inequality allowing to assess which part of regional income inequalities could be due to neighborhood features. The proposal is illustrated for the case of the Spanish peninsular provinces during the period 1981–2011. It is shown that the comparison of inequality among neighborhood and specific provincial factors open a new manner of analysis that can shed light on the terms of policy recommendations, specially on those identified as place-based oriented, by introducing a new perspective about what is the relevant place on which the policy has to be set in order to achieve regional inequalities reductions.