Structural Reforms and Regional Convergence

35 Pages Posted: 27 Aug 2012

See all articles by Antonio Spilimbergo

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

Natasha Xingyuan Che

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2012

Abstract

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

Spilimbergo, Antonio and Che, Natasha Xingyuan, Structural Reforms and Regional Convergence (April 2012). IMF Working Paper No. 12/106. Available at SSRN: https://ssrn.com/abstract=2135985

Antonio Spilimbergo (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6346 (Phone)
202-623-6336 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute ( email )

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

Natasha Xingyuan Che

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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