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Persistence of inequalities across the Spanish regions*

Jesús Rodríguez‐López, Diego Martínez () and Diego Romero‐Ávila
Authors registered in the RePEc Author Service: Jesús Rodríguez-López () and Diego Romero-Ávila ()

Papers in Regional Science, 2009, vol. 88, issue 4, 841-862

Abstract: Abstract This paper investigates several issues concerning persistence of inequalities of relative income per capita among the Spanish regions over the period 1980 to 2002. For that purpose we take a Bayesian approach which extends the work by Canova and Marcet. First, we study to what extent there exists a fixed effect bias in the standard cross‐section estimates, and we find that the speed of convergence is indeed underestimated. Second, we provide a battery of results whereby steady states and convergence rates are obtained for a continuum of prior distributions. We explain the higher convergence rates of regional incomes to their own steady states on the basis of the high degree of capital mobility among the Spanish regions. Finally, we also deal with persistence of inequalities by determining whether initial conditions matter in the distribution of regional steady states, and our conclusion is that regional disparities tend to persist over time. Resumen Este artículo investiga varios temas relacionados con la persistencia de desigualdades regionales en España en renta per cápita entre 1980 y 2002. Para ello adoptamos un enfoque bayesiano que extiende el trabajo de Canova y Marcet. Primero, estudiamos en qué medida existe un sesgo por efectos fijos en las estimaciones transversales estándar, y encontramos que la velocidad de convergencia está de hecho subestimada. Segundo, proporcionamos una batería de resultados en los que los estados estacionarios y las tasas de convergencia se obtienen para un continuo de distribuciones a priori. Explicamos las tasas elevadas de convergencia de rentas regionales a sus propios estados estacionarios en función del elevado grado de movilidad de capital entre regiones españolas. Finalmente, tratamos también la persistencia de desigualdades determinando si las condiciones iniciales influyen en la distribución de estados estacionarios regionales, y nuestra conclusión es que las disparidades regionales tienden a persistir en el tiempo.

Date: 2009
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Working Paper: Persistence in inequalities across the Spanish regions (2006) Downloads
Working Paper: Persistence in inequalities across the Spanish regions (2005) Downloads
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Handle: RePEc:bla:presci:v:88:y:2009:i:4:p:841-862