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Counterfactual Distribution Dynamics across European Regions

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  • Davide Fiaschi, Andrea Mario Lavezzi and Angela Parenti

Abstract

This paper proposes a methodology which combines elements of parametric regression analysis with the nonparametric distribution dynamics approach in order to analyse the role of some variables in the convergence of productivity across European regions over the period 1980-2002. We find that the initial productivity crucially accounts in the convergence process across European regions. Differently, employment growth seems not to play a role, while the Structural and Cohesion Funds seem to play a positive role, even though such effect seems to be very low and statistically significant only at the low bound of the range of initial productivity. The structural change of regional economies plays a positive role, but such e effect is statistically significant only for the least productive regions. The output composition of a region in 1980 a effects the convergence process of productivity growth in several ways. In particular, the share of non market services on output acts like a source of convergence from 1980 to 2002 but in the long-run it plays a negligible role. Finally, the share of finance acts like a force of divergence across European regions, especially for the least productive regions.

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Bibliographic Info

Paper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2009/85.

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Date of creation: 19 Jun 2009
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Handle: RePEc:pie:dsedps:2009/85

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Keywords: European regional policy; structural change; convergence; European regions.;

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  1. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence Across States and Regions," Papers, Yale - Economic Growth Center 629, Yale - Economic Growth Center.
  2. Roberto Basile, 2009. "Productivity Polarization across Regions in Europe," International Regional Science Review, , , vol. 32(1), pages 92-115, January.
  3. Davide Fiaschi & Marzia Romanelli, 2009. "Nonlinear dynamics in welfare and the evolution of world inequality," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 724, Bank of Italy, Economic Research and International Relations Area.
  4. Andrew B. Bernard & Steven N. Durlauf, 1994. "Interpreting Tests of the Convergence Hypothesis," NBER Technical Working Papers 0159, National Bureau of Economic Research, Inc.
  5. Paul Beaudry & Fabrice Collard & David A. Green, 2005. "Changes in the World Distribution of Output Per Worker, 1960-1998: How a Standard Decomposition Tells an Unorthodox Story," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 741-753, November.
  6. Fiaschi, Davide & Lavezzi, Andrea Mario, 2007. "Productivity polarization and sectoral dynamics in European regions," Journal of Macroeconomics, Elsevier, Elsevier, vol. 29(3), pages 612-637, September.
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