jessonpagaduan/spatial-inequality

This paper analyzes spatial income inequality and convergence in the Philippines and its course over the process of economic development in the period 2000-2018.

This paper analyzes spatial income inequality and convergence in the Philippines and its course over the process of economic development in the period 2000-2018. First, combining higher-quality nighttime lights and gridded population data, I construct measures of spatial inequality for the Philippines and its 17 administrative regions. I find that the country has achieved tremendous improvements in narrowing income disparities over the last two decades. Second, I uncover beta convergence of income per capita across provinces, with the speed of convergence around 5% and a half-life time of convergence of 20 years. Despite sizable declines in spatial inequalities, however, income differences within regions as opposed to disparities between regions has become more important in the recent years. Looking at inequalities within regions, I find that at least 80% of the regions experienced sigma convergence. Third, I find a U-shaped relationship between spatial inequality and economic development, which is robust across parametric and semiparametric specifications as well as to business cycle effects. Fourth, I show that while spatial inequality follows the same U-shaped trajectory over the process of structural transformation, that is, a structural shift from agriculture to modern industries and services, the strong U-shaped link between spatial inequality and economic development appears above and beyond its relationship with structural transformation.