Eckey, Hans-Friedrich Dreger, Christian Türck, Matthias
DIW Discussion Papers No. 631
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
In this paper, the process of productivity convergence is investigated for the enlarged European Union using regional (NUTS-2) data. The Solow model extended by human capital is employed as a workhorse. Alternative strategies are proposed to control for spatial effects. All specifications confirm the presence of convergence with an annual speed between 3 and 3.5 percent towards regional steady states. Furthermore, a geographically weighted regression approach indicates a wide variation in the speed of convergence across the regions, where a higher speed is striking in particular in France and the UK. Clusters of convergence can be identified, where regions with high convergence also have high initial income levels.
Solow model regional convergence spatial lags spatial filtering