Structural Reforms and Regional Convergence
35 Pages Posted: 27 Aug 2012
Date Written: April 2012
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.
Keywords: Structural Reforms, Regional Convergence, Economic Growth, Income Inequality, Economic Models, Fiscal Reforms, Labor Market Policy, Labor Market Reforms, equation, wage, minimum wage, severance payment, statistics, correlation, standard errors, statistical significance, samples, probability, benefits, empirical model, wages, minimum wages, dynamic models, heteroscedasticity, severance payments, unemployment insurance, wage level, significance levels, equations, diffusion processes, sample size, estimation of equation, significance level, wage rate
JEL Classification: O11, O18, O29, O33, J68
Suggested Citation: Suggested Citation