SPATIAL AND SECTORAL PRODUCTIVITY CONVERGENCE BETWEEN EUROPEAN REGIONS, 1975-2000

Abstract

This paper analyzes the evolution of labor productivity disparities among 145 European regions over 1975-2000 according to the concepts of ƒã- and ƒÒ-convergence and emphasizes the importance of including spatial effects and a disaggregated analysis at a sectoral level. We detect a significant -convergence only in aggregate labor productivity and in the services sectors among peripheral regions. We also show that omitting spatial effects leads to biased measures of -convergence. We then estimate a pooled -convergence model including spatial autocorrelation and sectoral differentiation. The results indicate that disparities in productivity levels between core and peripheral regions persist by vary by sector.convergence, spatial econometrics, labor productivity, sectoral approach