Modern economic growth and convergence : the long-run evolution of regional inequality in Spain (1860-2010)

Abstract

This paper performs an analysis of sigma and beta convergence for Spanish regions during the period 1860-2010 using different spatial units and time intervals. Growth regressions are run unconditionally using a Generalised Least Squares estimator and also conditionally by using a fixed effects estimator and a panel data two-step Generalised Method of Moments estimator. My results confirm the existence of conditional beta convergence for Spanish regions over the whole studied period; however, different time partitions for growth regressions show the convergence parameter has not remained constant at all throughout different periods. I conclude that, although the neoclassical growth model with endogenous savings provides a satisfactory picture of convergence in Spain if the whole period 1860-2010 is considered, other forces apart from diminishing returns to capital accumulation also play a role.