Résumé
Large disparities exist among European regions. Not only do they exist across national borders, but also
within many states. Countries redistribute a substantial amount of wealth through taxation and social
security systems in order to promote equity among individuals. Such inter-personal redistribution has an
impact at regional level, even in the absence of explicit regional policy at national level.
Economic theory can help explain different levels of economic development as well as convergence and
divergence dynamics among economies. Economic theory also suggests that taxes and redistribution of
income are generally distorting economic activity.
This paper empirically investigates convergence among European regions and the impact of interpersonal
transfers on regional growth. Standard beta-convergence regressions are done in a cross
section as well as in a panel data setting. Results suggest that convergence is taking place among the 229
European regions in the dataset, since a negative relationship between the initial level of income and the
subsequent growth rates exist. Convergence within countries happens much slower, which indicates that
the observed convergence is due to a convergence across countries. In order to estimate the impact of
transfers, a transfer index allowing for a separate analysis of contributing and receiving regions is
computed. Once controlling for regional fixed heterogeneity, no significant effect of transfers on income
growth is found, neither on the contributing nor on the benefiting regions.
langue originale | Anglais |
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Etat de la publication | Publié - 2011 |