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Regional Income Inequality and Convergence Processes in the EU-25

Tiiu Paas and Friso Schlitte

No 355, HWWA Discussion Papers from Hamburg Institute of International Economics (HWWA)

Abstract: This paper deals with the development of regional income disparities and convergence processes in the countries of the European Union. Overall, 861 regions – mainly at the regional level NUTS-3 – of the EU enlarged in May 2004 are analysed for the period 1995 - 2003. We use the two classical concepts of s – and ß-convergence. Furthermore, spatial econometric methods were applied in order to identify existing spatial interaction and to control effects of spatial autocorrelation. The analyses show that poorer regions mainly situated in the European periphery have tended to grow faster than the relatively rich European core regions. However, this catching-up process has been painfully slow and it has been driven mainly by national factors. Particularly, national growth rates in the new member states have been dominated by very dynamic metropolitan areas that had experienced relatively high income levels already at the outset in 1995. As a consequence, in the course of a general catching-up process, regional disparities within the new member countries have increased.

Keywords: regional inequality; convergence; EU-25; regional interactions; spatial econometrics (search for similar items in EconPapers)
JEL-codes: O11 R11 C21 C23 (search for similar items in EconPapers)
Date: 2006
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Related works:
Journal Article: Regional Income Inequality and Convergence Processes in the EU-25 (2008) Downloads
Working Paper: Regional income inequality and convergence processes in the EU-25 (2007) Downloads
Working Paper: Regional Income Inequality and Convergence Processes in the EU-25 (2006) Downloads
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