|M.Sc Student||Antonio Malka|
|Subject||The Role of Socio-Economic Diversity in the Spatial|
Distribution of Growth and Inequality:
the Case of Israeli Cities
|Department||Department of Architecture and Town Planning||Supervisor||Professor Emeritus Daniel Shefer|
|Full Thesis text|
In studying the relationship between economic growth, income inequality, and diversity, we engage primarily in two well-established discourses: 1. the relationship between growth and inequality; and 2. the relationship between growth and diversity. In this research we identify the link between diversity and inequality and its consequential impact on growth. By examining the interrelationships between growth, diversity, and inequality in a spatial context, we are able to draw policy recommendations that aim at decreasing inequality without jeopardizing growth.
Inequality in this study is evaluated in terms of the distribution of average income per worker among 55 cities in Israel as well as between regions, dividing Israel into only two primary regions - core and periphery, and over a 12-year period, 1995-2006. Why do some cities exhibit greater equality in wages among residents while others experience relative inequality? What economic growth conditions are present in such situations? What are the regional differences in income and why do they persist? The literature points to a cyclical and self-reinforcing relationship between growth and inequality where growth increases inequality and inequality increases growth. By introducing spatial scale and the nature of economic activity to the analysis we are able to distinguish between conditions where inequality is beneficial or detrimental to growth.
Our findings corroborate other empirical studies that show that diverse economic activity tends to concentrate geographically in order to exploit economies of scale. Based on empirical studies that show that innovation occurs in particularly diverse cities, we examine the spatial distribution of the ICT sector (Information and Communications Technology), Israel’s leading and most innovative economic sector in order to identify diverse environments and evaluate the impact of diversity on growth and inequality. Our findings show that local inequality that is associated with diversity and access to economic opportunity is beneficial for growth, while inter-city or inter-regional inequality that is associated with imperfect capital markets that are due to distance and technology is detrimental and may lead to an overall economic slowdown.
Based on the empirical analysis, we conclude that development policy should not be narrowly considered by the geographic periphery alone, but rather address inefficient barriers to access by promoting technology transfer and improvement of transportation infrastructure. By improving access, the concentration of diversity and growth in the core has the potential to expand economic opportunities and exploit potential gains of decreased inter-city or inter-regional inequality.