Spatial Inequality in Productivity in the European Union: Sectoral and Regional Factors

Abstract

To gain a deeper insight into territorial imbalances existing in the European Union, the authors analyzedthe evolution of regional disparitiesin productivity between 1977 and 1999. The results obtained reveal an overall decrease in regional inequality in productivity throughout the study period, even though the density functions estimated suggest the existence of some degree of polarization in the regional distribution of output per worker. The article also examines the role played by sectoral and regional factorsin productivity convergence, using a combination of shift-share analysis and various theoretical results obtained in the literature on personal income distribution. The analysis shows that regional inequality in output per worker in the European Unionis closelylinkedtointrinsic dif ferences between regions. Likewise,the empirical evidence highlights the importance of the national component and spatial location in accounting for observed dif ferences in sectoral productivity across the European regions. Finally, the findings supportthe relevance of one-sector growth modelsto explain per capitaincome disparitiesinthe European context.