Convergence and Inequality of income: the case of Western Balkan countries

This paper analyses the convergence process of inequality in income among five Balkan countries in the 1989-2008 period. This study is carried out in comparison with the situation in the European Union of 27 countries. The originality of our approach is to consider the convergence of countries' contributions to the international income inequality. The model allows simultaneously to test the convergence process of income and inequality. The results indicate a real convergence process between Balkan countries, while persistence is detected between European Union countries. However, the thorough investigations stress that there are differences in the pace of convergence across sub-periods. Thus, income and inequality convergence are higher during the 2000s for the EU-27, while the majority of convergence took place during the second half of the 1990s for Balkan countries. Accordingly, the development gap between Balkans and European Union remains important.