Income disparities in Colombia: market potential and neighborhood effects

ABSTRACT

Market potential has been shown to have an important impact on the explanation of observed income disparities both across countries and across regions within countries. However, the importance of neighbourhood for ‘income levels-market potential’ regressions is largely neglected in the empirical studies on the subject. This paper tries to fill up this gap by estimating fixed effects spatial panel data models using Colombian regional data over the period 1990–2015. Our results reveal that around half of the impact of market potential on regional income disparities can be attributed to neighbouring regions.

KEYWORDS:

• Spatial panel data
• market potential
• income disparities
• Colombia

Acknowledgments

This work was supported by the Spanish Ministry of Economics and Competitiveness (grant number ECO2015-68597-P (MINECO/FEDER))

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ ‘Peso colombiano’ is the name of the Colombian currency

² DANE: Departamento Administrativo Nacional de Estadística, www.dane.gov.co

Additional information

Funding

This work was supported by the Ministerio de Economía y Competitividad [ECO2015-68597-P (MINECO/FEDER)].