A new look to convergence in Spain: A spatial econometric approach

Abstract:

This article examines the process of provincial convergence which has taken place in Spain between 1985 and 2002. Focusing on labour productivity, it estimates the so-called ‘classical’ models of convergence, concluding that, contrary to what has been suggested by previous work, convergence has not stagnated. After stressing the limitations of this type of approach, the article attempts to overcome them, by, on the one hand, estimating the density function and the degree of internal mobility in the provincial productivity distribution; and on the other hand, by considering the influence of possible spatial effects on the aforementioned distribution. The conclusion arrived at is threefold: we confirm the existence of provincial convergence of productivity; we reveal the low level of intradistributional mobility; and we do indeed find spatial effects, although they do not seem to be too relevant for the convergence process.