Spatial inequalities explained: Evidence from Burkina Faso

Empirical evidence suggests that regional disparities in incomes are often very high, that these disparities do not necessarily disappear as economies grow and that these disparities are itself an important driver of growth. We use a novel approach based on multilevel modeling to decompose the sources of spatial disparities in incomes among households in Burkina Faso. We show that spatial disparities are not only driven by the spatial concentration of households with particular endowments but to a large extent also by disparities in community endowments. Climatic differences across regions due also matter, but to a much smaller extent.