Structural Reforms and Regional Convergence
April 1, 2012
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Summary
Which structural reforms affect the speed the regional convergence within a country? We found that domestic financial development, trade/current account openness, better institutional infrastructure, and selected labor market reforms facilitate regional convergence. However, these reforms have mixed effects on the growth of regions closer to the country’s development frontier. We also document that regional income disparity and average income are inversely correlated across countries so that speeding up regional convergence increases national income. We also present a theoretical model to discuss these results.
Subject: Labor, Labor taxes, Macrostructural analysis, Minimum wages, Production, Productivity, Structural reforms, Tax policy, Tax wedge, Taxes
Keywords: capital intensity level, country frontier, cross-region mobility, development frontier, development level, economic growth, EU sample, Euro area debt crisis, frontier region, GDP variable, Global, growth rate, income inequality, Labor taxes, Minimum wages, part of the country, Productivity, region j, regional convergence, Structural reforms, Tax wedge, WP
Pages:
34
Volume:
2012
DOI:
Issue:
106
Series:
Working Paper No. 2012/106
Stock No:
WPIEA2012106
ISBN:
9781475503272
ISSN:
1018-5941
