TY  - RPRT
        AU  - Montes-Viñas, Ana
AU  - Sologon, Denisa M.
AU  - Li, Jinjing
        TI  - National Stability, Local Reconfiguration: Demographics, Labour Markets, and Redistribution in Spatial Income Inequality
        PY  - 2026/Apr/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 18610
        UR  - https://www.iza.org/publications/dp18610
        AB  - This paper examines how stable national disposable income inequality can coexist with substantial local reconfiguration in a small, open, and integrated economy. Focusing on Luxembourg between 2011 and 2021, it analyses how demographic change, labour market restructuring, and redistribution shape inequality across municipalities. We develop a spatial microsimulation framework combining EU-SILC microdata, Census aggregates, and EUROMOD to recover local disposable income distributions where representative small-area data are unavailable. Three findings emerge. First, inequality is driven mainly by disparities within municipalities, not by differences between them. Second, although disposable income inequality is spatially clustered, clustering weakens over time. Stable national inequality conceals divergent local trajectories: inequality declines in Luxembourg City and its urban belt, but rises in the southern industrial belt, the northern region, and other municipalities. Third, counterfactual decompositions show that demographic change increased local inequality outside the urban core, while labour market change and the tax-benefit system partly offset this pressure.
        KW  - spatial income inequality
KW  - disposable income inequality
KW  - spatial microsimulation
KW  - counterfactual decomposition
KW  - tax-benefit policy
KW  - labour market structure
KW  - demographic change
KW  - EUROMOD
        ER  -