Decomposing Changes in Inequality and Welfare Between EU Regions: The Roles of Population Change, Re-Ranking and Income Growth

This paper explores the changes in inequality and welfare between EU regions at the NUTS 3 level over the 2003–2011 period. Changes in absolute and relative inequalities are broken down into components explaining the effects of population change, re-ranking of regions and income growth between regional per capita incomes. Each component of inequality change is further decomposed by subgroup, revealing the contributions arising from changes within subgroups and from changes between subgroups. The decomposition of the change in absolute inequality is used to develop a decomposition of the change in welfare between EU regions.