The paper surveys the main trends of per capita income convergence in the European Union. It stresses that income disparities have ceased to diminish across the European regions since 1980, although convergence between countries has continued in this period. Income levels have diverged inside each country in a weak sense with two exceptions. Theoretical forces behind income convergence are analized by means of the decomposition of per capita income in labour productivity and employment rate and applied to the stylized facts outlined above. The case of Portugal is regarded as an atypical one, since the country has converged as a whole to the European average as the main factor behind this performance. However, the limited convergence of labor productivity bounds the expected future performance of the Portuguese economy.
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Article provided by Faculdade de Economia, Universidade de Coimbra in its journal Notas Económicas.