Growth clubs and regional economic convergence in Germany

Oliver Holtemöller, Christoph Schult and Anna Solms

No 4/2026, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: Many countries and regions remain below the level of economic activity of the world's most advanced economies. Some countries form growth clubs, some are stuck in the middle-income trap, and some stay on a very low level of economic activity. Although this situation is well documented on the country level, there is less evidence at the sub-national level within countries. We estimate county-level capital stocks and price indices and provide a comprehensive county-level data set for Germany. We find no evidence of convergence across all counties even if we condition on important drivers of long-term growth such as physical and human capital accumulation. Instead, we identify five convergence clubs, using endogenous clustering. We analyze differences in growth paths and describe the identified clusters based on variations in contributions of capital, labor, and total factor productivity to economic growth. Additionally, we examine the role of migration for regional development and find that net migration has in particular contributed to growth in richer regions.

Keywords: convergence clubs; growth accounting; regional economic growth (search for similar items in EconPapers)
JEL-codes: C23 O47 R11 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-geo and nep-uep
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:340108

DOI: 10.18717/dpakdx-vs40

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