Regional convergence across European Union

Abstract

This paper analyzes the per-capita incomes convergence process across 140 NUTS2 European regions during the period 1980-1999. Two methods of analysis have been used. The first adopts the non parametric method proposed by Quah (1996, 1997) to study whether the cross-regions income distribution shows evidence of convergence, i.e a tendency for the steady-state distribution to cluster around one or more poles of attraction, or divergence. The second uses panel unit root tests for cross-sectionally correlated panels. Unlike other studies, we find evidence of convergence among the EU regions. When looking at the distribution of per-capita income, we show that it converges toward the average pole, without convergence clubs emerging. Panel unit root tests strongly reject the null of divergence for the full sample of regions and evidence is also provided for two regional subgroups.Key words : Convergence, Distribution analysis, Panel unit root tests.