Mixture Models, Convergence Clubs, and Polarization

21 Pages Posted: 15 Feb 2010

See all articles by M. Grazia Pittau

M. Grazia Pittau

University of Rome I

Roberto Zelli

University of Rome I

Paul A. Johnson

Competition Bureau of Canada; Bates White, LLC

Abstract

We argue that modeling the cross-country distribution of per capita income as a mixture distribution provides a natural framework for the detection of convergence clubs. The framework yields tests for the number of component distributions that are likely to be more informative than “bump hunting” tests and includes a method of assessing the cross-component immobility necessary to imply a correspondence between components and convergence clubs. Applying this approach to Penn World Data for the period 1960 to 2000 we find evidence of three component densities. We find little cross-component mobility and so interpret the multiple mixture components as representing convergence clubs. We document a pronounced tendency for the strength of the bonds between countries and clubs to increase and show that the well-known “hollowing out” of the middle of the distribution is largely attributable to the increased concentration of the rich countries around their component means.

Suggested Citation

Pittau, Maria Grazia and Zelli, Roberto and Johnson, Paul A., Mixture Models, Convergence Clubs, and Polarization. Review of Income and Wealth, Vol. 56, Issue 1, pp. 102-122, March 2010. Available at SSRN: https://ssrn.com/abstract=1551557 or http://dx.doi.org/10.1111/j.1475-4991.2009.00365.x

Maria Grazia Pittau

University of Rome I ( email )

Piazzale Aldo Moro 5
Rome, 00185
Italy

Roberto Zelli

University of Rome I ( email )

Piazzale Aldo Moro, 5
Rome, 00185
Italy

Paul A. Johnson

Competition Bureau of Canada ( email )

50 Victoria Street
Place du Portage, Phase I 17th Floor
Hull, Quebec K1A 0C9
Canada
819.953.8534 (Phone)

Bates White, LLC ( email )

1300 Eye St NW
Suite 600E
Washington, DC 20005
United States
202-747-1439 (Phone)

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