IMF Working Papers

Structural Reforms and Regional Convergence

By Antonio Spilimbergo, Natasha X Che

April 1, 2012

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Antonio Spilimbergo, and Natasha X Che. Structural Reforms and Regional Convergence, (USA: International Monetary Fund, 2012) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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

Publication Details

  • Pages:

    34

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2012/106

  • Stock No:

    WPIEA2012106

  • ISBN:

    9781475503272

  • ISSN:

    1018-5941

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