Measuring Inequality using Geospatial Data
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Date
2021-12
Publication Type
Conference Paper
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yes
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Abstract
The main challenge in studying economic inequality is limited data availability, which is particularly problematic in developing countries. We construct a measure of economic inequality for 234 countries/territories from 1992 to 2013 using satellite data on night lights and gridded population data. Key methodological innovations include the use of varying levels of data aggregation, and a calibration of the lights-prosperity relationship to match traditional inequality measures based on income data. We obtain a measure that is significantly correlated with cross country variation in income inequality. We provide three applications of the data in the fields of health economics and international finance. Our results show that light- and income-based inequality measures lead to similar results in terms of cross-country correlations, but not for the dynamics of inequality within countries. Namely, we find that the light-based inequality measure can capture more enduring features of economic activity that are not directly captured by income.
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published
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Publisher
European Economic Association
Event
World Inequality Conference 2021
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Subject
Nighttime lights; Inequality; Gridded population
Organisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
03716 - Sturm, Jan-Egbert / Sturm, Jan-Egbert
Notes
Conference lecture held on December 7, 2021.