Abstract:
This paper analyzes the evolution of labor productivity disparities among 145 European regions over 1975-2000 according to the concepts of ƒã- and ƒÒ-convergence and emphasizes the importance of including spatial effects and a disaggregated analysis at a sectoral level. We detect a significant -convergence only in aggregate labor productivity and in the services sectors among peripheral regions. We also show that omitting spatial effects leads to biased measures of -convergence. We then estimate a pooled -convergence model including spatial autocorrelation and sectoral differentiation. The results indicate that disparities in productivity levels between core and peripheral regions persist by vary by sector.