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“It should also be noted that the objective of convergence and equal distribution, including across under-performing areas, can hinder efforts to generate growth. Contrariwise, the objective of competitiveness can exacerbate regional and social inequalities, by targeting efforts on zones of excellence where projects achieve greater returns (dynamic major cities, higher levels of general education, the most advanced projects, infrastructures with the heaviest traffic, and so on). If cohesion policy and the Lisbon Strategy come into conflict, it must be borne in mind that the former, for the moment, is founded on a rather more solid legal foundation than the latter” European Commission (2005, p. 9)Adaptation of Cohesion Policy to the Enlarged Europe and the Lisbon and Gothenburg Objectives.

EU countries, including those in Central and Eastern Europe, seem to have increasingly similar economies, allowing for the study of real convergence as a process of equalising income levels (measured by GDP per capita). Studies of income convergence in the European Union also have a regional dimension and often focus on convergence at the NUTS2 or NUTS3 regional level. The level of development and income in Polish regions differ significantly. The regional policy implemented at the national and EU level focuses on reducing these differences.

The main aim of the chapter is to analyse the income convergence process among regions in Poland and verify the effectiveness of regional policy implemented at the national and EU level.

The study uses Barro type regression for panel data, log t convergence test, and club clustering algorithm introduced by Phillips and Sul to identify patterns of club convergence in Polish regions. The data used for the study is the Local Data Bank provided by Statistics Poland, which includes gross domestic product per capita at the NUTS-3 level for 73 Polish regions over the period of 2000–2020.

The results of the study indicate a very weak convergence process for all Polish NUTS-3 regions and suggest a club convergence. The club convergence is characterised by regions with similar income levels clustering together. The regional distribution of clubs is similar to the regional distribution of income. The study's findings provide important insights into the effectiveness of regional policy in Poland and suggest that policymakers need to focus on policies that promote catch-up growth in less developed regions. The study also highlights the importance of supporting the most developed regions in the country as they can play a crucial role in driving the country's economic growth and prosperity.

This paper extends a methodology proposed by Nissanov and Silber (2009) who decomposed the coefficient β used in convergence analysis into three components checking respectively whether there was σ-convergence, whether ‘pure mobility’ (upward or downward income mobility) was lower among the poor and what the extent of ‘residual mobility’ (the third component) was.

The present paper extends this analysis by applying it to the analysis of regional per capita income levels but also to that of within regions inequality and regional welfare levels. The empirical illustration uses Portuguese data on average earnings at the level of NUTS3.

Does the standard of living vary from region to region in Portugal and are spatial units in Portugal converging in income? We observe spatial error dependence between municipalities and estimate spatial econometric models to test convergence. For conditional convergence we conclude that primary sector employment, activity rate, and percentage of active population with higher education are important to distinguish the “steady state” of the regional economies, reflecting the labor market at regional level.

We investigate the convergence of Chinese real GDP per capita at regional and provincial levels, looking separately at the sub‐periods before and after major economic reforms and paying attention to the possibility of structural breaks induced by the ‘Great Leap Forward’. At the regional level we reject convergence pre‐ and post‐reform. At the provincial level we find evidence of a common regional trend for the Eastern region and again for the Central region, but not for the Western region. We conclude that, contrary to the policy objectives of the Chinese government, the regions of China have not shared a common development path.

The purpose of this paper is to analyse income inequality for a sample of 14 European countries and their composite regions using data from the Cambridge Econometrics regional dataset from 1980 to 2009. The purpose of the paper is to provide insight into the dynamics of regional and national cohesion among the EU‐14 countries studied.

Initially, inequality is decomposed using the Theil coefficient into between and within country inequality to assess the extent to which convergence has occurred. To investigate the underlying causes of the changes in inequality, the Theil coefficient is further decomposed to assess the contribution of productivity and employment‐population ratio differentials to inequality.

The results indicate that while between‐country inequality has declined, within‐country inequality has increased by approximately 50 percent. Subsequent decomposition indicates that while productivity levels among regions have converged, the employment‐population ratios have diverged substantially driving increasing levels of inequality. This suggests that while EU cohesion policies have reduced productivity inequalities they have had little effect in stimulating convergence of employment‐population ratios across regions.

The paper argues that national priorities, particularly in the context of the current European economic crisis, are likely to hinder European Union level policies to reduce income inequality at a regional level. This may result in further increases in regional inequality among European regions.

This paper's main contribution is to highlight how national convergence can lead to regional divergence being overlooked. The value of the paper is that it provides policy insights, based on empirical evidence, for European cohesion policy.

Understanding and simulating construction activities is a vital issue from a macro-perspective, since construction is an important contributor in economic development. Although the construction labor productivity frontier has attracted much research effort, the temporal and regional characteristics have not yet been explored. The purpose of this paper is to investigate the long-run equilibrium and dynamics within construction development under a conditional frontier context.

Analogous to the simplified production function, this research adopts the conditional frontier theory to investigate the convergence of construction labor productivity across regions and over time. Error correction models are implemented to identify the long-run equilibrium and dynamics of construction labor productivity against three types of convergence hypotheses, while a panel regression method is used to capture the regional heterogeneity. The developed models are applied to investigate and simulate the construction labor productivity in the Australian states and territories.

The results suggest that construction labor productivity in Australia should converge to stable frontiers in a long-run perspective. The dynamics of the productivity are mainly caused by the technology utilization efficiency levels of the local construction industry, while the influences of changes in technology level and capital depending appear limited. Five regional clusters of the Australian construction labor productivity are suggested by the simulation results, including New South Wales; Australian Capital Territory; Northern Territory, Queensland, and Western Australia; South Australia; and Tasmania and Victoria.

Three types of frontier of construction labor productivity is proposed. An econometric approach is developed to identify the convergence frontier of construction labor productivity across regions over time. The specified model can provides accurate predictions of the construction labor productivity.

The study of regional income differences has been a matter of considerable debate and empirical testing for many years. More than three decades ago, Easterlin suggested that convergence of regional income levels ought not be held as a certain and inevitable result of the process of trade and economic development. He pointed out that while trade and free movement of labor may exert some pressure towards convergence of wages and income, there are other dynamic processes that can thwart the equilibrating effects of free trade in resources and goods. The notion that free trade and efficient markets ensure long‐run equilibrium among regional income flows in a changing environment has been challenged more vigorously in recent years. Eberts has suggested that incomplete information and mismatch between worker skills and job requirements, and institutional barriers to mobility often lead to incomplete adjustment in wages and persistent differences in regional income levels. This paper contends that swift convergence of regional income flows to a steady state cannot materialize unless investments in human capital and research are uniform across regions. In the context of the endogenous growth theory, convergence of per capita income is not synonymous with convergence of total factor productivity. As Abramovitz has pointed out, even if total factor productivity across regions show convergence, demographic and investment factors may inhibit complete convergence in per capita income.

This paper aims to propose that a Neave-Worthington Match Test for Ordered Alternatives is a simple, non-parametric test that can be used to consider Gibrat’s law. Whether the law, that states that the proportional rate of growth is independent of absolute size, is supported by regional house price growth rates is considered. The Match Test is further used to test the applicability of beta-convergence and dual economy models to a house price context.

The Match Test relates an actual rank order with an expected one. Gibrat’s law implies house price growth rates are independent of the absolute price levels. Beta-convergence posits that growth rates are inversely related to the initial price level. With a divergent system, there is a direct relationship between size-order and growth rates. As such, the Match Test is used to test alternative models of size-growth relationship.

Rather than convergence, there is a tendency to diverge across the UK, but not in Eire. That said, the size of growth shocks is related to price level on the upswing of a price cycle, but not in the down. Assigning the high-priced regions of the two islands into core and the rest into a periphery, total matching is dominated by the capital cities’ growth. The sigma-convergence observed in British house prices is likely to be associated with slower beta-divergence, not a convergent system. The law of Gibrat is not found to apply in a regional house price context.

This work only covers two countries and nineteen regions. Gibrat’s law in regional house prices may be better examined using a multi-country analysis.

As the law of Gibrat is not found to apply in a regional house price context and core-regions appearing to dislocated, this has interesting implications for growth trend analysis and the claim of cointegration, which should be explored further. In particular, the level-growth relationship in the cyclical price upswing points to a ratcheting of differentials between high and low house price regions. The common trends in the long run may result from corrective periodic crashes. Not an ideal mechanism for policymakers.

To the best of the author’s knowledge, this paper makes a novel use of the Neave-Worthington test in the realm of regional convergence-divergence and in the first consideration of the law of Gibrat in a house price context across two countries.

This paper aims to examine the convergence in per-capita income (measured as per-capita net state domestic product) of regions in India during the period 1990–1991 to 2017–2018. Two separate analyses have also been done for the sub-periods, i.e., 1990–1991 to 2003–2004 and 2004–2005 to 2017–2018, to find out the effect of the second phase of economic liberalization in India.

In a panel data study, the estimation of absolute and conditional beta (β)-convergence and sigma (σ)-convergence across 17 Indian regions have been done. To measure the dispersion of per-capita income across the regions in India, the standard deviation of logs, Gini coefficient, Mehran measure, Piesch measure, Kakwani measure and Theil index have been estimated. In addition to this, these indices have been regressed over time.

This study finds the presence of absolute and conditional β-convergence; the regions with low initial per-capita income have grown faster than the regions with high initial per-capita income. Further, this study finds that foreign direct investment (FDI) inflow and the availability of power enhance growth across regions. However, this study finds the presence of σ-divergence, which indicates that the economic inequality among the regions in India has widened over the periods, calling for policy interventions to promote growth in the backward regions through the promotion of FDI inflow and the availability of power.

This study highlights the rising economic inequality among the regions in India by analyzing the latest available data through appropriate econometric techniques.