Modeling of Income Inequality of the Population with Spatial Dependence in Russia

Tatiana Yu. Ivakhnenko – Junior Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The paper tested the existence of spatial dependence in the model of income inequality for 77 regions of the Russian Federation in the period 2004–2020. For this purpose, cross-section and panel models were evaluated with the inclusion of spatial lags in the dependent variable (SAR), as well as errors (SEM) of the income inequality model. The results of the estimation of both cross-section and panel models with region fixed effects indicate the existence of a positive spatial correlation both in the level and in the shocks of income inequality.

The main conclusion is that the level of income inequality in a given region positively depends on the level and shocks of income inequality in neighboring regions. Interregional migration, transfers, and trade are considered as possible channels of this influence.

Key words: Gini index, income inequality, spatial models, Russia’s regions.

JEL-codes: C23, D31, O15.