I am grateful to three anonymous referees as well as to the co-editor, Steven Brakman, for helpful and constructive comments.
SPATIAL CONVERGENCE OF REGIONS REVISITED: A SPATIAL MAXIMUM LIKELIHOOD PANEL APPROACH*
Article first published online: 12 JUL 2012
© 2012 Wiley Periodicals, Inc.
Journal of Regional Science
Volume 52, Issue 5, pages 857–873, December 2012
How to Cite
Pfaffermayr, M. (2012), SPATIAL CONVERGENCE OF REGIONS REVISITED: A SPATIAL MAXIMUM LIKELIHOOD PANEL APPROACH. Journal of Regional Science, 52: 857–873. doi: 10.1111/j.1467-9787.2012.00773.x
- Issue published online: 16 NOV 2012
- Article first published online: 12 JUL 2012
- Received: November 2010; revised: February 2012; accepted: February 2012.
ABSTRACT This paper argues that one should account for the endogeneity of important explanatory variables and the initial differences in technological efficiency when analyzing spatial income convergence among regions. In addition, the approach of Wooldridge (2005), who proposes a convenient solution to the initial condition problem in dynamic panels, proves to be fruitful. In a panel of 211 European regions observed from 1980 to 2005, the estimated speed of convergence is substantially higher, on average, than the legendary 2 percent found in many cross-section studies. Moreover, it exhibits pronounced variation across regions due to factor mobility and knowledge spillovers.