Regional convergence clusters across Europe

Abstract

Per capita incomes across European regions are not equal and do not stay constant; regional income distributions fluctuate over time. Such a process could have many possible limiting outcomes: complete equality (convergence), stratification, and continually increasing inequality are but three distinct possibilities. This paper asks if nation-state, macro factors and physical-geography spillover effects help explain the observed distribution dynamics across European regions. Geographical factors are found to matter more than national ones; but both are important for explaining inequality dynamics.