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Structural Reforms and Regional Convergence

Antonio Spilimbergo () and Natasha Xingyuan Che ()

No 12/106, IMF Working Papers from International Monetary Fund

Abstract: Which structural reforms affect the speed the regional convergence within a country? We found that domestic financial development, trade/current account openness, better institutional infrastructure, and selected labor market reforms facilitate regional convergence. However, these reforms have mixed effects on the growth of regions closer to the country’s development frontier. We also document that regional income disparity and average income are inversely correlated across countries so that speeding up regional convergence increases national income. We also present a theoretical model to discuss these results.

Keywords: Economic models; Europe; Euro Area; Economic growth; Cross country analysis; Income inequality; Fiscal reforms; Labor market reforms; Labor market policy; Structural reforms, regional convergence, equation, wage, minimum wage, severance payment, statistics, Macroeconomic Analyses of Economic Development, Economic Development: Regional, Urban, and Rural Analyses, Development Planning and Policy: Other, Mobility, Unemployment, and Vacancies: Public Policy, (search for similar items in EconPapers)
Pages: 34
Date: 2012-04-01
New Economics Papers: this item is included in nep-geo, nep-opm and nep-pbe
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Handle: RePEc:imf:imfwpa:12/106