Club convergence and inter-regional inequality in Mexico, 1940-2015

Abstract

ABSTRACTIn this paper, we analyse the convergence patterns in inter-regional inequality and income per capita for the Mexican states over the period 1940–2015. To that end, we apply a time-series approach considering temporal and transitional heterogeneity. Results indicate that Mexican states do not converge to the same long-run equilibrium. Instead of overall convergence, we find club convergence for both regional inequality and income per capita. The existence of clubs means that measures aimed at reducing income inequality and promoting regional growth should consider the specific characteristics revealed in the convergence analyses. Furthermore, pro-growth regional policies in Mexico may not necessarily reduce inter-regional income inequality. Income disparities thus need to be specifically addressed through pro-poor regional policies.