Spatial Analysis of Income Disparities Between West and East of the Russian Federation

In the research paper we carry out a spatial analysis of the differences in income between the west and east of the Russian Federation. We analyze the gross rates of GRP per capita, average income per capita and wages. To consider real values, indicators are divided by the cost of a fixed set of goods and services in each region. We construct sigma-convergence, unconditional and conditional beta-convergence models. Models of conditional beta-convergence with spatial error are estimated using the least-squares method. It is shown that there is a beta-convergence between Russian regions, it is also proved that the average growth rates of the income per capita and wages are significantly affected by accidental shocks in neighboring regions. To analyze the differences in income between the west and east of the Russian Federation, hypotheses about the equality of mean values and variances are tested, also dummy variables were included in the regression models. We cannot do a definitive answer about GRP: from 2004 to 2008, the GRP per capita is equal between the east and west of the country and since 2009 hypothesis about equality of GRP per capita is not confirmed. The average income per capita between the west and east of the country is equal. The hypothesis about the equality of the average values of wages is not confirmed.