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A fragmented country: Regional income convergence in Germany

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  • Cieślik, Andrzej
  • Misiak, Tomasz

Abstract

In this paper we study regional income convergence in Germany using the novel approach proposed by Phillips and Sul (2007) that has not been so far employed in the context of German regions. Our study employs data at two levels of the NUTS regional classification for the period 2000-2021. At the NUTS I level, the panel data consist of 16 states (Länder - 10 in West Germany and 6 in East Germany), while at the NUTS II level it consists of 38 total Governmental districts (Regierungsbezirke - 30 in West Germany and 8 in East Germany). Our research results indicate that the income convergence hypothesis among all German regions is rejected for the whole country both at NUTS I and NUTS II levels. Likewise, the convergence hypothesis is rejected among both Eastern and Western regions. Nevertheless, the results show the presence of club convergence. Among all German regions, we identify three convergence clubs, and their distribution, especially at the NUTS II level, indicates that the axis of contemporary development trends runs horizontally rather than vertically. This allows us to argue that in contrast to the previous division between the richer Western and the poorer Eastern regions, a new division between the richer South and the poorer North has been emerging.

Suggested Citation

  • Cieślik, Andrzej & Misiak, Tomasz, 2025. "A fragmented country: Regional income convergence in Germany," Structural Change and Economic Dynamics, Elsevier, vol. 75(C), pages 248-260.
    • Handle: RePEc:eee:streco:v:75:y:2025:i:c:p:248-260
    DOI: 10.1016/j.strueco.2025.08.006
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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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