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Is There A Trade-off Between Regional Growth and National Income? Theory and Evidence from the EU

Young-Bae Kim ()

No 1008, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: The paper theoretically and empirically investigates the effect of changes in national labourmarket conditions on regional growth from the point of view of local economies. The mechanism of efficiency wage is introduced to a growth model and it is argued that local regions belonging to richer countries would experience slower economic growth than those in poorer countries, ceteris paribus. The model emphasises the process of interregional wage dependence in which national average wage or income plays an important role in determining regional wages and growth. The empirical findings from EU regional data also suggest that national income is significantly and negatively associated with regional growth. The adverse effect of national income on regional growth is also observed to be stronger among richer regions whose income is above the national average.

Keywords: Artificial Neural Networks; Forecasting; Inflation (search for similar items in EconPapers)
JEL-codes: C51 C52 C53 E31 E37 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2008-11
New Economics Papers: this item is included in nep-fdg, nep-geo, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:1008

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