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European Regional Convergence in a Human Capital Augmented Solow Model

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  • Hans-Friedrich Eckey
  • Christian Dreger
  • Matthias Türck

Abstract

In this paper, the process of productivity convergence is investigated for the enlarged European Union using regional (NUTS-2) data. The Solow model extended by human capital is employed as a workhorse. Alternative strategies are proposed to control for spatial effects. All specifications confirm the presence of convergence with an annual speed between 3 and 3.5 percent towards regional steady states. Furthermore, a geographically weighted regression approach indicates a wide variation in the speed of convergence across the regions, where a higher speed is striking in particular in France and the UK. Clusters of convergence can be identified, where regions with high convergence also have high initial income levels.

Suggested Citation

  • Hans-Friedrich Eckey & Christian Dreger & Matthias Türck, 2006. "European Regional Convergence in a Human Capital Augmented Solow Model," Discussion Papers of DIW Berlin 631, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp631
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    References listed on IDEAS

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    4. Harald Badinger & Werner Muller & Gabriele Tondl, 2004. "Regional Convergence in the European Union, 1985- 1999: A Spatial Dynamic Panel Analysis," Regional Studies, Taylor & Francis Journals, vol. 38(3), pages 241-253.
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    Citations

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    Cited by:

    1. Johanna Vogel, 2012. "Agglomeration and Growth: Evidence from the Regions of Central and Eastern Europe," ERSA conference papers ersa12p1089, European Regional Science Association.
    2. Jaworska Renata, 2014. "Health Inequalities Across The European Union Regions: A Beta-Convergence Approach," Comparative Economic Research, Sciendo, vol. 17(4), pages 71-86, December.
    3. E D Balogun, 2010. "Alternative reconsideration of output growth differential for West African Monetary Zone," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Proceedings of the SARB/IFC seminar on "Economic and financial convergence en route to regional economic integration: experience, prospects and statis, volume 32, pages 106-120, Bank for International Settlements.
    4. Nikos Benos & Stelios Karagiannis, 2010. "The Role of Human Capital in Economic Growth: Evidence from Greek Regions," Chapters, in: Neri Salvadori (ed.), Institutional and Social Dynamics of Growth and Distribution, chapter 7, Edward Elgar Publishing.
    5. Alicja Olejnik, 2008. "Using the spatial autoregressively distributed lag model in assessing the regional convergence of per‐capita income in the EU25," Papers in Regional Science, Wiley Blackwell, vol. 87(3), pages 371-384, August.
    6. Ritzen, Jo & Soete, Luc, 2011. "Research, higher education and innovation: redesigning multi-level governance within Europe in a period of crisis," MERIT Working Papers 2011-056, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Solow model; regional convergence; spatial lags; spatial filtering;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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