IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Growth and Convergence in Income Per Capita and Income Inequality in the Regions of the EU

  • Vassilis Tselios

Abstract The neoclassical growth model predicts that there will be both a reduction of income per capita disparities over time and long-term convergence in income inequality levels. This paper examines whether this holds true for the EU using data from the European Community Household Panel for 102 regions over the period 1995–2000. The analysis is conducted using cross-sectional and panel data growth models with spatial interaction effects. The results reveal the presence of a conditional convergence in income per capita after controlling for educational attainment, unemployment, sectoral composition, spatially lagged growth of income per capita, and regional fixed effects, and that of an unconditional convergence in income inequality. Expansion et convergence dans les revenus par habitant et inégalité des revenus dans les régions de l'UE RÉSUMÉ Le modèle de croissance néoclassique prévoit que l'on assistera, à terme, à une réduction des disparités entre les revenus par habitant, ainsi qu’à une convergence à long terme des disparités dans l'inégalité des revenus. La présente communication examine l'applicabilité éventuelle de ce modèle à l'UE, en utilisant des données de l'European Community Household Panel pour 102 régions, au cours de la période 1995–2000. On effectue cette analyse en utilisant des modèles de croissance transversaux et de commissions, avec des effets d'interaction spatiale: ses résultats révèlent l'existence d'une convergence des revenus par habitant, après avoir contrôlé les réalisations éducationnelles, la composition sectorielle, la croissance du retard spatial des revenus par habitant, ainsi que des effets régionaux fixes, ainsi que la présence d'une convergence inconditionnelle dans l'inégalité des revenus. Crecimiento y convergencia en ingresos per capita y desigualdad de ingresos en las regiones de la UE RÉSUMÉN El modelo neoclásico de crecimiento predice que con el tiempo se producirá una reducción de las disparidades en los ingresos per capita, así como una convergencia a largo plazo de los niveles de desigualdad de ingresos. Este trabajo examina la veracidad de este caso en la UE utilizando datos procedentes del European Community Household Panel aplicables a 102 regiones durante el período 1995–2000. El análisis se conduce utilizando modelos de crecimiento de datos transeccionales y de panel con efectos de interacción espacial. Los resultados revelan la presencia de una convergencia condicional en los ingresos per capita después de controlar el rendimiento educacional, desempleo, composición sectoral, crecimiento limitado espacialmente de los ingresos per capita y efectos regionales fijos, así como la presencia de una convergencia incondicional en la desigualdad de ingresos.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.taylorandfrancisonline.com/doi/abs/10.1080/17421770903114711
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Taylor & Francis Journals in its journal Spatial Economic Analysis.

Volume (Year): 4 (2009)
Issue (Month): 3 ()
Pages: 343-370

as
in new window

Handle: RePEc:taf:specan:v:4:y:2009:i:3:p:343-370
Contact details of provider: Web page: http://www.tandfonline.com/RSEA20

Order Information: Web: http://www.tandfonline.com/pricing/journal/RSEA20

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. S Durlauf & Danny Quah, 1998. "The New Empirics of Economic Growth," CEP Discussion Papers dp0384, Centre for Economic Performance, LSE.
  2. Vassilis Tselios, 2008. "Income and educational inequalities in the regions of the European Union: Geographical spillovers under welfare state restrictions," Papers in Regional Science, Wiley Blackwell, vol. 87(3), pages 403-430, 08.
  3. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
  4. Aghion, Philippe & Caroli, Eve & Garcia-Penalosa, Cecilia, 1999. "Inequality and economic growth: the perspective of the new growth theories," CEPREMAP Working Papers (Couverture Orange) 9908, CEPREMAP.
  5. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
  6. Juan R. Cuadrado-Roura, 2001. "Regional convergence in the European Union: From hypothesis to the actual trends," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(3), pages 333-356.
  7. Robert A Buckle & Amy A Cruickshank, 2007. "The Challenge of Structural Change in APEC Economies," Treasury Working Paper Series 07/06, New Zealand Treasury.
  8. Branstetter, Lee G., 2001. "Are knowledge spillovers international or intranational in scope?: Microeconometric evidence from the U.S. and Japan," Journal of International Economics, Elsevier, vol. 53(1), pages 53-79, February.
  9. Audretsch, David B. & Feldman, Maryann P., 2004. "Knowledge spillovers and the geography of innovation," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 61, pages 2713-2739 Elsevier.
  10. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
  11. Andrés Rodríguez-Pose & Vassilis Tselios, 2007. "Education and income inequality in the regions of the European Union," Working Papers 2007-17, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  12. repec:dau:papers:123456789/10091 is not listed on IDEAS
  13. ERTUR, Cem & KOCH, Wilfried, 2005. "Growth, Technological Interdependence and Spatial Externalities: Theory and Evidence," LEG - Document de travail - Economie 2005-03, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.
  14. Ravallion, Martin, 2003. "Inequality convergence," Economics Letters, Elsevier, vol. 80(3), pages 351-356, September.
  15. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
  16. Stadler, George W, 1990. "Business Cycle Models with Endogenous Technology," American Economic Review, American Economic Association, vol. 80(4), pages 763-78, September.
  17. Easterly, William, 2000. "the middle class consensus and economic development," Policy Research Working Paper Series 2346, The World Bank.
  18. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
  19. Yongfu Huang & Jonathan Temple, 2005. "Does external trade promote financial development?," Bristol Economics Discussion Papers 05/575, Department of Economics, University of Bristol, UK.
  20. Pfaffermayr, Michael, 2009. "Conditional [beta]- and [sigma]-convergence in space: A maximum likelihood approach," Regional Science and Urban Economics, Elsevier, vol. 39(1), pages 63-78, January.
  21. Roland Bénabou, 1996. "Inequality and Growth," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 11-92 National Bureau of Economic Research, Inc.
  22. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  23. Esther Vaya Valcarce & Enrique Lopez Bazo & Rosina Moreno Serrano & Jordi Surinach Caralt, 2000. "Growth and externalities across economies. An empirical analysis using spatial econometrics," Working Papers in Economics 59, Universitat de Barcelona. Espai de Recerca en Economia.
  24. Baumol, William J, 1986. "Productivity Growth, Convergence, and Welfare: What the Long-run Data Show," American Economic Review, American Economic Association, vol. 76(5), pages 1072-85, December.
  25. Sergio T. Rebelo, 1990. "Long Run Policy Analysis and Long Run Growth," NBER Working Papers 3325, National Bureau of Economic Research, Inc.
  26. Paul Evans, 1997. "How Fast Do Economies Converge?," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 219-225, May.
  27. Roberto Ezcurra & Pedro Pascual, 2005. "Is there convergence in income inequality levels among the European regions?," Applied Economics Letters, Taylor & Francis Journals, vol. 12(12), pages 763-767.
  28. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
  29. Mark D. Partridge, 2005. "Does Income Distribution Affect U.S. State Economic Growth?," Journal of Regional Science, Wiley Blackwell, vol. 45(2), pages 363-394.
  30. Quah, Danny, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEPR Discussion Papers 1355, C.E.P.R. Discussion Papers.
  31. Banerjee, Abhijit V & Duflo, Esther, 2003. "Inequality and Growth: What Can the Data Say?," Journal of Economic Growth, Springer, vol. 8(3), pages 267-99, September.
  32. P Burridge, 1981. "Testing for a common factor in a spatial autoregression model," Environment and Planning A, Pion Ltd, London, vol. 13(7), pages 795-800, July.
  33. Galor, Oded, 2000. "Income distribution and the process of development," European Economic Review, Elsevier, vol. 44(4-6), pages 706-712, May.
  34. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence Across States and Regions," Papers 629, Yale - Economic Growth Center.
  35. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
  36. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Oxford University Press, vol. 38(2), pages 175-208.
  37. Manfred Fischer & Claudia Stirböck, 2006. "Pan-European regional income growth and club-convergence," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(4), pages 693-721, December.
  38. Magrini, Stefano, 2004. "Regional (di)convergence," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 62, pages 2741-2796 Elsevier.
  39. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  40. Bernard Fingleton, 2001. "Equilibrium and Economic Growth: Spatial Econometric Models and Simulations," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 117-147.
  41. Rodríguez-Pose, Andrés & Tselios, Vassilis, 2008. "Inequalities in Income and Education and Regional Economic Growth in Western Europe," Papers DYNREG34, Economic and Social Research Institute (ESRI).
  42. Barro, Robert J, 2000. "Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  43. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  44. Bernard Fingleton & Enrique López-Bazo, 2006. "Empirical growth models with spatial effects," Papers in Regional Science, Wiley Blackwell, vol. 85(2), pages 177-198, 06.
  45. Anselin, Luc & Bera, Anil K. & Florax, Raymond & Yoon, Mann J., 1996. "Simple diagnostic tests for spatial dependence," Regional Science and Urban Economics, Elsevier, vol. 26(1), pages 77-104, February.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:taf:specan:v:4:y:2009:i:3:p:343-370. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.