Regional Economic Inequality: The Cases of Brazil and Italy

The study of economic inequalities traces back to the beginning of economic sciences. In parallel, regional and local studies are on the rise with the better availability of disaggregate data and the understanding that localized trends diverge from national scenarios. The present work aims to contribute to the intersection of both study fields, investigating the level and trends of economic inequalities at the regional dimension. Brazil and Italy are used as case studies. Both countries have a persistent disparity between their regions – the Italian southern regions and the Brazilian northern ones historically lag behind their counterparts. Most studies on those countries’ regions perform a between-regions comparison on their development level, while the present work compares within-region economic inequalities. Furthermore, the choice of the two countries allows us to understand the scenario of a developing and a developed country, both strongly relevant in the global scenario, being among the top 10 biggest economies. The economic aspects studied are wealth and income inequality, produced using data on well-established household sample surveys, administrative data (when available), and adjusted using the national (regional) accounting system. The limitation of data availability and consequently limitation in the results is explored. A two-way fixed effects model is used to assess the relationship between inequality and development at the regional level. The results show a much more unequal scenario in Brazil than in Italy. Also, the econometric analysis points to a negative relationship between inequality and development for the Brazilian regions, but no evident relationship in Italy.