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Regional Economic Growth And Steady States With Free Factor Movement: A Theoretical Model With Evidence From Europe

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  • Sascha SARDADVAR

    (Institute for Economic Geography and GIScience, WU Vienna)

Abstract

This paper develops a spatial theoretical growth model in order to study the impact of physical and human capital relocations on the growth of open economies. Analytical and simulation results show how the respective neighbours determine an economy’s development, why convergence and diver-gence may alternate in the medium run, and that interregional migration as a consequence of interregional wage inequalities causes disparities to prevail in the long run. The empirical part applies spatial econometric specifications for European regions on the NUTS2 level for the observation period 2000-2013. The estimations underline the importance of human capital endowments and its relation with spatial location.

Suggested Citation

  • Sascha SARDADVAR, 2016. "Regional Economic Growth And Steady States With Free Factor Movement: A Theoretical Model With Evidence From Europe," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 43, pages 21-57.
    • Handle: RePEc:tou:journl:v:43:y:2016:p:21-57
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    More about this item

    Keywords

    NEOCLASSICAL GROWTH THEORY; HUMAN CAPITAL; IN-TERREGIONAL MIGRATION; CONVERGENCE; DIVERGENCE; EUROPEAN INTEGRATION;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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