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Productivity and income convergence in transition: theory and evidence from Central Europe

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  • Spruk, Rok

Abstract

The paper examines the evolution of income per capita for a sample of high-income transition countries in the period 1991-2007. The analysis focuses on the dynamics of income per capita convergence throughout the period. We review patterns of income dispersion in Central Europe in a historical perspective and examine the evolution of convergence and divergence in a distinct perspective. We present the model of beta convergence by augmenting the basic Solow-Swan model with human capital accumulation and total fertility rate. Our evidence suggests that high-income transition countries experienced a period of robust convergence as the income per capita differential, relative to the U.S level, diminished substantially over time. In addition, the increase in the stock of human capital contributed substantially to the speed of real convergence.

Suggested Citation

  • Spruk, Rok, 2011. "Productivity and income convergence in transition: theory and evidence from Central Europe," MPRA Paper 33389, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:33389
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    1. Tatomir, Cristina F. & Alexe, Ileana, 2011. "Laggards or performers? CEE vs. PIIGS countries’ catch-up with the Euro area in the last ten years," MPRA Paper 35715, University Library of Munich, Germany.

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    More about this item

    Keywords

    economic growth; output convergence; post-socialist transition; Solow model; panel-data estimation methodology;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General

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