Measuring regional inequality: part deux.

Tom Forth, 23 November 2020.

I've written about why dispersion of GVA/resident by NUTS2 region is my favourite measure of regional inequality.

I've shared the code I use to calculate it and the raw data it creates.

I've built an online tool so that you can explore the data for 2018.

But I know that a lot of people will want to read some takes. Given that it's taken me years to get this far, and I'm not even claiming I've figured it out yet, I can't really call them hot. So here are some tepid takes.

• Regional inequality in the EU (27 memebers, not including Croatia, and still including the UK) has been falling for at least two decades. This is a stunning achievement, largely driven by the reintregation of formerly communist economies into a modern, liberal, and open economic system.
• Regional inequality within Eastern European nations has increased enormously (not shown) as the larger cities and capitals of those countries have integrated themselves quickly into the world economy. Smaller cities and rural areas have seen their GDP/resident rise too, but by much less causing a huge rise in regional inequality within these nations.
• Regional inequality in Germany has fallen slowly but constantly. The formerly communist East, particularly the cities of Dresden, Berlin, Liepzig, and Dresden, has made good progress on catching up with the long-prosperous North, South and West of the country. There is still a big gap and a long way to go, but this is a huge achievement.
• Regional inequality in Spain has remained stable and quite low despite rapid economic growth focused on cities. Spain has a large number of succesful cities meaning that even as they pull ahead of inland rural, most of the population lives close to an economically strong city (albeit with high unemployment).
• Regional inequality in Austria has fallen and continues to fall. The Netherlands similarly has strong economies in almost every region, though none that is exceptionally strong by European standards. The Nordics follow this pattern too. Stockholm is a strong economy, so is Helsinki, so is Copenhagen, so is Aarhus, so is Tampere, so is Malmo, and so is Gothenburg.
• Economic stagnation in Italy has left regional inequality unchanged. The North has not pulled further away from the South simply because both the North and the South's economies have barely grown.
• The UK is not the most regionally unequal major economy in Europe! It is now the joint most regionally unequal major economy in Europe. If you want to play around with the data to move those numbers a bit you can. French regional inequality is a bit lower if we ignore overseas departements, but not much, and I don't think the tweaking is worth the time.

Dispersion of GDP tells us about the regional inequality of economic strength. It does not tell us about the regional inequality of living standards. I have done that analysis too and it seems to show that,

France redistributes GDP very strongly within the country meaning that inequality of income is much lower than its very high regional inequality of GDP.

Italy and Spain redistribute GDP very weakly within the country. Income inequality is barely lower than GDP inequality.

The UK is midway between Spain and France. There is significant redistribution.

My next plan is to improve my code and my understanding of this data. And at the same time to explore regional inequality in East Europe. Because the countries of East Europe are smaller than the West it is probably sensible to consider the block as a whole (working with regional inequality for small countries is dangerous). But before I do that, I think I'd best speak to some Polish, Czechs, Slovakians, Bulgarians, Romanians, and all the rest. I don't want to do anything too stupid.

Last of all. You'll notice I've included the regional inequality of North England. It's very low. North England's economy is much more regionally than even the most equal national economies of Europe. North England has a similar population to The Netherlands and very little of the same economic strength. North England's economy is almost universally, in every region, the same strenght as the poorest regions of The Netherlands. We should aiming for much better, even if it increases our regional inequality. Let's be more Swedish and Dutch, and less poor.

Next blog post I'll be taking aim at the often mathematically-challenged claim that "there is more inequality within places than between them". It's usually meaningless, and the UK would do a lot better at levelling up if people stopped saying it.