Regional Productivity and Income Convergence in the Unified Germany, 1992-2000

摘要

This paper investigates regional convergence of labour productivity and income per capita in the period 1992-2000 for the unified Germany using spatial econometric techniques. Up to now only first-order spatial models have been employed in investigating convergence across regions and countries. An exploratory data analysis reveals, however, that the fundamental variables of the convergence equation exhibit a clear pattern of higher-order spatial dependencies. It is shown that higher-order spatial autocorrelation can be captured by the spatial ARMA model. In the spatial econometric analysis of German regional labour markets, new indicators of human capital and investment intensity are used that can resolve some 'puzzles' established in previous studies. Substantial differences in both β~ and σ-convergence across West and East German regions are assessed.