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Economic Integration in Europe and Income Divergence over EU Regions (1995 – 2006)

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  • S. Ghosh
  • G. Faber
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    Abstract

    This paper tests the question whether the integration process in the EU has contributed to the often-observed growing dispersion of income over the regions of the EU, in the presence of convergence between the member states. We do this by introducing price convergence as an indicator of integration and controlling for the concentration of skilled labour and allowing for path dependency. Our main findings are in line with the expectations of the New Economic Geography School in that integration does contribute to the growing regional inequality in the EU. Price convergence is a significant explanatory variable even after the introduction of a time lag in the dependent variable.

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    File URL: http://dspace.library.uu.nl/bitstream/handle/1874/191120/10-19.pdf
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    Bibliographic Info

    Paper provided by Utrecht School of Economics in its series Working Papers with number 10-19.

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    Length: 29 pages
    Date of creation: 2010
    Date of revision:
    Handle: RePEc:use:tkiwps:1019

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    1. Andrés Rodríguez-Pose & Ugo Fratesi, 2003. "Between development and social policies: the impact of European Structural Funds in Objective 1 Regions," European Economy Group Working Papers 28, European Economy Group.
    2. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
    3. Karen Helene Midelfart-Knarvik & Henry G. Overman, 2002. "Delocation and European integration: is structural spending justified?," Economic Policy, CEPR & CES & MSH, vol. 17(35), pages 321-359, October.
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