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Regional income inequality and convergence processes in the EU-25

  • Paas, Tiiu
  • Schlitte, Friso

This paper deals with the development of disparities in regional per capita GDP and convergence processes in the enlarged EU. A cross-section of 861 regions is analysed for the period from 1995 to 2003. Firstly, we apply Theil's index of inequality in order to show the development of between- and within-country disparities. Secondly, we conduct a formal Ø-convergence analysis, taking into account the effects of spatial dependence and controlling for national effects. The analyses show that poorer regions mainly situated in the European periphery have tended to grow faster than the relatively rich regions in the centre of Europe. However, the convergence process has been driven mainly by national factors. In the course of this process, regional disparities within the new member countries have actually increased. Furthermore, we find that spatial growth spillovers lose relevance when crossing a national border. Thus, border impediments still matter for the intensity of economic cross-border integration in the EU.

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Paper provided by Hamburg Institute of International Economics (HWWI) in its series HWWI Research Papers with number 1-11.

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Date of creation: 2007
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Handle: RePEc:zbw:hwwirp:1-11
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