Differentiated Effects of Sectoral Public Investment on Income Inequality: Empirical Evidence for the Department of Lima, 2007–2024
DOI:
https://doi.org/10.33595/2226-1478.16.4.1415Keywords:
Public investment, income inequality, Gini coefficientAbstract
Lima, despite concentrating the largest share of public investment in the country, continues to exhibit persistent levels of income inequality, which highlights the need to examine whether such investment has contributed to reducing these gaps during the 2007–2024 period. In this context, the present study analyzes the effect of sectoral public investment in transportation, health, education, and sanitation on income inequality in the department of Lima, measured through the Gini coefficient. To this end, a Fully Modified Ordinary Least Squares (FMOLS) model was applied, which is suitable for non-stationary series and corrects for endogeneity and serial correlation, using annual data for the 2007–2024 period and incorporating control variables: investment in other sectors and economic growth. The results reveal that sectoral public investment as a whole explains 53% of the variability of Lima’s Gini coefficient. However, at the individual level, only investment in transportation shows an inverse and statistically significant relationship with inequality, whereas investments in health, education, and sanitation do not exhibit individual statistical significance. The study concludes that the impact of sectoral public investment on income inequality displays heterogeneous effects within the department of Lima, according to recent empirical evidence.
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