Socio-economic Convergence in the EU at National and Regional Level

Abstract

Abstract Problem Statement. There are concerns that convergence in the EU is mostly economic, which may lead to increased inequality and social disparities. Also, research shows that mild divergence can be observed at regional level, which questions the effectiveness of the EU cohesion policy. Purpose of Study. This paper explores whether socio-economic convergence occurs at both national and regional level, and whether the EU cohesion policy is effective. Methods. Using Eurostat data since 2000, we use coefficients of variation to analyze convergence for disposable income, unemployment rates, proportion of people living in households with low work intensity, and migration. Findings and Results. Convergence and divergence are faster at country level, and trends at national level are mostly different than those at regional level in terms of direction and magnitude. For unemployment rates and work intensity, regional data shows more volatility, indicating higher within-country volatility, while between-country volatility is higher for incomes and net migration. Except for unemployment, the Great Recession has not induced an erosion on the convergence observed in the pre-crisis period; in particular, low work intensity holds steady. Greater volatility in internal migration is unexpected given the convergence in income and unemployment rate. Conclusions and Recommendations. Most findings point out that the EU cohesion policy is effective in reducing socio-economic disparities before 2008, and containing them doing the Great Depression. However, this is mostly due to increased between-country convergence. Divergence in internal migration is unexpected and requires further research.