Date of Graduation
Spring 5-19-2023
Document Type
Thesis
Degree Name
Master of Science in Applied Economics (MSAE)
College/School
College of Arts and Sciences
Department/Program
Economics
First Advisor
Dr. Jesse Anttila-Hughes
Abstract
This paper examines the relationship between income inequality and economic complexity, adding to the literature by providing new evidence for Metropolitan Statistical Areas (MSAs). With populations in cities rapidly increasing world-wide, settlement scaling research has revealed significant correlations between population size and various aspects of socio-economic wellbeing, including income inequality. Our study utilizes the Economic Complexity Index (ECI), a recently developed measure of economic development, to examine how changes in regional production structures influence inequality and shed light on the evolving nature of urban economies. By employing fixed effects OLS regression with clustered standard errors on both panel data from 2010-2019 and a 2019 cross-section, we discover a positive and statistically significant relationship between ECI and income inequality as measured by the Gini Index across US MSAs. The finding from this data suggests a Simpson’s paradox, and contributes to our understanding of high complexity, high inequality areas. Our results shed light on the differential effects from economic diversification strategies.
Recommended Citation
Johnson, Brooke, "The Relationship Between Economic Complexity and Income Inequality: A study on the United States Metropolitan Statistical Areas" (2023). Master's Theses. 1508.
https://repository.usfca.edu/thes/1508
