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Economic Integration in Europe and Income Divergence over EU Regions (1995 – 2006)

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  • S. Ghosh
  • G. Faber

Abstract

This paper tests the question whether the integration process in the EU has contributed to the often-observed growing dispersion of income over the regions of the EU, in the presence of convergence between the member states. We do this by introducing price convergence as an indicator of integration and controlling for the concentration of skilled labour and allowing for path dependency. Our main findings are in line with the expectations of the New Economic Geography School in that integration does contribute to the growing regional inequality in the EU. Price convergence is a significant explanatory variable even after the introduction of a time lag in the dependent variable.

Suggested Citation

  • S. Ghosh & G. Faber, 2010. "Economic Integration in Europe and Income Divergence over EU Regions (1995 – 2006)," Working Papers 10-19, Utrecht School of Economics.
    • Handle: RePEc:use:tkiwps:1019
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    File URL: https://dspace.library.uu.nl/bitstream/handle/1874/309782/10_19.pdf
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    References listed on IDEAS

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    1. Andres RodrIguez-Pose & Ugo Fratesi†, 2004. "Between Development and Social Policies: The Impact of European Structural Funds in Objective 1 Regions," Regional Studies, Taylor & Francis Journals, vol. 38(1), pages 97-113.
    2. Brülhart, Marius, 1996. "Regional Integration, Scale Economies and Industry Location in the European Union," CEPR Discussion Papers 1435, C.E.P.R. Discussion Papers.
    3. Karen Helene Midelfart-Knarvik & Henry G. Overman, 2002. "Delocation and European integration: is structural spending justified? [‘Specialization patterns in Europe’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 17(35), pages 321-359.
    4. Dan Ben-David, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 653-679.
    5. Philippe De Lombaerde, 2005. "Indicators of Regional Integration: Methodological Issues," The Institute for International Integration Studies Discussion Paper Series iiisdp064, IIIS.
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    1. Agnieszka Głodowska & Bożena Pera, 2019. "On the Relationship between Economic Integration, Business Environment and Real Convergence: The Experience of the CEE Countries," Economies, MDPI, vol. 7(2), pages 1-19, June.

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    Keywords

    Economic integration; Regional inequality; European Union;
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