Convergence of Spanish Regions, 1990-2003. A New Approach Using Stochastic Dominance Techniques

Abstract

The traditional analysis of economic convergence between countries or regions is usually performed by comparing distribution means, such as per-capita income. This kind of analysis, which is intimately related to the economic welfare of a society, presents, however, only a partial approach to measuring economic convergence, given that the disparities within regions or countries are not considered. The empirical methodology used in this article complements the traditional convergence approach, introducing efficiency and inequality aspects of income distribution. Using first and second stochastic dominance, the convergence among Spanish regions from 1990 to 2003 is studied by means of two new statistics developed here. Per-capita income data taken from the Encuesta de Presupuestos Familiares (EPF [the Spanish Household Budget Survey]) of 1990-1991 and the Spanish Survey on Income and Living Conditions (SILC) of 2003 are employed to make the comparisons. We find that a divergence process is taking place in Spain between rich and poor regions

How Does a Policymaker Rank Regional Income Distributions across Years? A Study on the Evolution of Greek Regional per Capita Income

“…Zarco and Pérez (2007) apply inference-based stochastic dominance methods to study welfare, inequality, and poverty in the EU countries in the year 2000. Additionally, Zarco et al (2010) use inference-based stochastic dominance methods to study the evolution of the per capita income among Spanish regions from 1990 to 2003. Both studies find a lack of convergence.…”