Impact of industrial specialization and economic development on income inequality in the regions of Russia

Abstract

The degree of income differentiation depends on many factors, including the level of regional economic development, production structure and industrial specialization. In this paper, we assess the impact of the industrial specialization of Russian regions on income inequality measured by the Gini coefficient. Based on the regional data over the period 2005 to 2018, we build an econometric model applying the Arellano-Bover / Blundell-Bond estimation method. We use shares of the main industries in gross regional product to describe production structure of regions. The modelling results show that the classic Kuznets curve is not empirically supported for the regions of Russia. Besides, we find that the larger the share of mining, manufacturing, construction, trade and financial sector in GRP, the higher the inequality in the region, while the share of agriculture does not affect it significantly.

Keywords

• regional inequality
• industrial specialization
• incomes of the population