Evaluating economic and social convergences across European countries: Could Macroeconomic Imbalance Procedure indicators shed some light?

Abstract

Financial and economic crises that swept over the European Union in 2008 reshaped divergences across its member states. While the impact on the economic dimension has been thoroughly analysed, the same does not hold for the social dimensions. The assessment of employment and social conditions has assumed a more prominent role with the launch of dashboards for monitoring wellbeing both at national and international level. This debate has been partially mirrored in the Macroeconomic Imbalance Procedure, introduced with the aim of strengthening European Union economic governance, and based on a set of indicators potentially able to monitor both economic and social developments.

Using this set of indicators, we propose a multivariate analysis based on the comparison of 2007 and 2014 data to investigate possible increases in dissimilarities among European Union countries when looking at the same time at economic, employment and social indicators. We argue that the economic and financial crises have reinforced divergence across countries, with the presence of a core and a periphery subset related to Southern countries.

Doing so the novelty of our work is twofold: exploring a new source of data and testing it as a useful tool to investigate economic and social convergence in Europe.