A New Approach for Analysing Income Convergence Across Countries

Abstract

In this paper we develop a coherent framework that integrates both traditional measures of beta-convergence and sigma-convergence within a study of cross-country income dynamics. To do this we exploit the close links that exist between studies of income convergence and studies analysing the progressivity of the tax system. Our framework offers a simple algebraic decomposition of sigma-convergence as the combined effect of beta-convergence and leapfrogging among countries. We illustrate our approach using data for the period 1960-2000.