Inter and Intra-Regional Income Inequalities Attributable to Spatial Concentration in Pakistan

Abstract Reducing inequality is essential to sustainable growth in regions. Due to varying geographic locations and locally formed development strategies, agglomeration disparities fluctuate among urban areas. This study is uniquely designed to measure the extent to which spatial agglomeration impairs inter and intra inequalities using two distinct techniques, Geographic Information System (GIS) and Propensity Score Matching (PSM). The results obtained from both analyses are in line with the theoretical framework established in the study. The results show that income growth is significantly impacted by the geographical concentration of industries. After matching, agglomerated regions have 22.5% higher average income than less agglomerated areas, which upsurges inter-regional disparities. Additionally, as income growth is unevenly distributed among inhabitants of the same region, inequalities in a treated regions are estimated to increase by approximately 2.5% more in comparison to the untreated regions that are relatively less concentrated, exacerbating intra-regional inequality.