Determinants of regional growth and convergence in Germany

K. Haaf and Clemens Kool

No 17-12, Working Papers from Utrecht School of Economics

Abstract: In this paper, we analyse the sources of real per capita income growth and convergence in the 16 German states over the period 1995-2014 using a panel approach. The empirical analysis applies the popular growth – initial income equation. We augment the basic model specification with a trend term and a crisis dummy. We then augment the model with additional explanatory variables and account for non-linear interaction effects. Overall, we find evidence of slow but significant convergence once the crisis and a trend are appropriately accounted for. Internal migration has a positive impact on growth in the East and thus contributes to the convergence between Eastern and Western states. Horizontal tax equalisation is ineffective in promoting growth and convergence, but we do find some evidence that federal supplementary grants have contributed to convergence between grant receiving and non-receiving states. Structural funding is found to have opposing growth effects on Eastern and Western states and has significantly promoted convergence.

Keywords: Internal migration; Fiscal equalisation; Structural funding; Panel approach; Interaction effects (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-cta and nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://dspace.library.uu.nl/bitstream/handle/1874 ... USE_DP_2017_1712.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:use:tkiwps:1712

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Utrecht School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Marina Muilwijk ().