Income disparities and convergence across regions of Central Europe

Abstract

This paper deals with the analysis of regional income disparities of the net disposable income of households (in Euro per inhabitant) across the regions of Central Europe (Austria, Czech Republic, Slovakia, Poland, Hungary and Germany) during the period 2000-2013. The analysis deals with the 82 NUTS 2 (Nomenclature of Territorial Units for Statistics) regions and is based on the concept of sigma-convergence, beta-convergence and growth-volatility relationship. Preliminary analysis concentrating on mapping of the analysed indicators is followed by consideration of the region’s location supported by the results of spatial autocorrelation testing. The sigma-convergence analysis reveals the persistence of disparities in the net disposable income of households in the period 2000-2013 both at the national and subnational level. Although the results of spatial analysis have proved the existence of spatial dependence, following the classical approach, the beta-convergence concept is tested with the use of both non-spatial and spatial models. The potentially different convergence characteristics of Visegrad 4 countries’ (Czech Republic, Slovakia, Poland, Hungary) regions and regions of Austria and Germany as well as the examination of the possible relationship between the regional growth and volatility are also taken into account in the econometric convergence modelling.