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The Distribution Dynamics of Income in Central and Eastern Europe relative to the EU: A Nonparametric Analysis

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  • Nikolay Nenovsky
  • Kiril Tochkov

Abstract

After more than two decades of transition and integration, countries in Central and Eastern Europe (CEE) still exhibit income levels that are significantly lower than the European Union (EU) average. This paper examines convergence in per-capita GDP between CEE and the EU over the period 1990-2012 by employing a combination of parametric and nonparametric methods, which provide more detailed insights than previous studies. The results indicate that the first decade of transition has been marked by divergence from the EU benchmark. In contrast, CEE countries experienced strong convergence over the 2000s, even in the face of the global financial crisis. However, the distribution of relative income evolved from a unimodal to a multimodal one, revealing growing disparities within CEE. Human capital accumulation and progress in economic reforms are identified as the key determinants of convergence, while financial deepening and price instability had a negative effect, especially in the past decade.

Suggested Citation

  • Nikolay Nenovsky & Kiril Tochkov, 2013. "The Distribution Dynamics of Income in Central and Eastern Europe relative to the EU: A Nonparametric Analysis," William Davidson Institute Working Papers Series wp1063, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2013-1063
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    Cited by:

    1. Ana-Maria Holobiuc, 2020. "Income Convergence in the European Union: National and Regional Dimensions," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2020(2), pages 45-65.

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    More about this item

    Keywords

    income convergence; nonparametric methods; European Union; Central and Eastern Europe;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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