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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.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.44770.de/dp631.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 631.

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Length: 24 p.
Date of creation: 2006
Date of revision:
Handle: RePEc:diw:diwwpp:dp631

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Keywords: Solow model; regional convergence; spatial lags; spatial filtering;

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  1. Bassanini, Andrea & Scarpetta, Stefano, 2002. "Does human capital matter for growth in OECD countries? A pooled mean-group approach," Economics Letters, Elsevier, Elsevier, vol. 74(3), pages 399-405, February.
  2. Robert J. Barro & Xavier Sala-i-Martin, 1990. "Economic Growth and Convergence across The United States," NBER Working Papers 3419, National Bureau of Economic Research, Inc.
  3. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence Across States and Regions," Papers, Yale - Economic Growth Center 629, Yale - Economic Growth Center.
  4. Karl Aiginger & Martin Falk, 2005. "Explaining Differences in Economic Growth among OECD Countries," Empirica, Springer, Springer, vol. 32(1), pages 19-43, 03.
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Cited by:
  1. Balogun, Emmanuel Dele, 2009. "Alternative reconsideration of output growth differrential for the West African Monetary Zone," MPRA Paper 13416, University Library of Munich, Germany.
  2. E D Balogun, 2010. "Alternative reconsideration of output growth differential for West African Monetary Zone," IFC Bulletins chapters, Bank for International Settlements, 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.

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