Pastor Monsálvez, José M. and Serrano, Lorenzo (2009): European integration and inequality among countries: a lifecycle income analysis. Published in: Fundación BBVA - Documentos de Trabajo , Vol. 14, (2009)
Download (286kB) | Preview
We analyze the effects of the expansions of the European Union on inequality using an approach based on individuals' lifecycle incomes. This allows us to consider the effect of different rates of growth and survival rates. This differs form the usual analyses of inequality that focus on the evolution of current per capita income for the period. Our results show that inequality in terms of permanent income was substantially less than in current per capita income at the time of all the expansions except those of the last ten years. The results point to the key role of policies that stimulate growth in the less developed countries. With an annual β-convergence of 2% in current income, inequality in permanent income would be one third lower.
|Item Type:||MPRA Paper|
|Original Title:||European integration and inequality among countries: a lifecycle income analysis|
|Keywords:||Permanent income, inequality, European Union|
|Subjects:||D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O19 - International Linkages to Development; Role of International Organizations
|Depositing User:||Joaquin Maudos|
|Date Deposited:||11. Nov 2009 00:00|
|Last Modified:||10. Jan 2014 03:41|
Abiad, A.G., Leigh, D. & Mody, A. 2007, "International Finance and Income Convergence: Europe is Different", International Monetary Fund (IMF) Working Paper, no. 07/64.
Barro, R.J. & Sala-i-Martin, X. 1995, Economic Growth, NY: Mc Graw-hill.
Barro, R.J. & Sala-i-Martin, X. 1992, "Convergence", Journal of Political Economy, vol. 100, pp. 223-251.
Becker, G., Philipson, T.J. & Soares, R. 2005, "The Quantity and Quality of Life and the Evolution of World Inequality", American Economic Review, vol. 95, no. 1, pp. 277-291.
Becker, G., Philipson, T.J. & Soares, R. 2001, "Growth and Mortality in Less Developed Nations", Unpublished manuscript, University of Chicago.
Cappelen, A., Castellacci, F., Faggerberg, J. and Verspagen, B. 2003, "The Impact of EU Regional Support on Growth and Convergence in the European Union", Journal of Common Market Studies, vol. 41, no. 09, 621-644.
Caves, R.E. & Barton, D.R. 1990, Efficiency in US manufacturing industries, MIT Press Cambridge, Mass.
Delgado-Rodriguez, M.J. & Alvarez-Ayuso, I. 2008, "Economic Growth and Convergence of EU-member Status: An Empirical Investigation", Review of Development Economics, vol. 12, no. 3, pp. 486-497.
Dowrick, S., Dunlop, Y. & Quiggin, J. 2003, "Social Indicators and Comparisons of Living Standards", Journal of Development Economics, vol. 70, no. 2, pp. 501-529.
Ertur, C. & Koch, W. 2006, "Regional disparities in the European Union and the enlargement process: an exploratory spatial data analysis, 1995–2000", The Annals of Regional Science, vol. 40, no. 4, pp. 723-765.
European Commission 2004, "A new partnership for cohesion convergence competitiveness cooperation", Third report on economic and social cohesion.
Francois, J.F., McDonald, B. & Nordström, H. 1994, The Uruguay Round: A Global General Equilibrium Assessment, Centre for Economic Policy Research (CEPR). Discussion Paper 1067.
Friedman, M. 1957, A theory of the consumption function, 4th print edn, Princeton University Press, Princeton NJ.
Gasiorek, M., Smith, A. & Venables, A. 1992, "Trade and welfare: a general equilibrium model" in Trade Flows and Trade Policy after 1992 Cambridge University Press, , pp. 35-63.
Guldager, P. 1997, "Convergence of the EU Member States towards the EMU requirements, 1986 to 1993", European Journal of Political Economy, vol. 13, no. 2, pp. 247-259.
Harris, R. 1984, "Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition", The American Economic Review, vol. 74, no. 5, pp. 1016-1032.
Henrekson, M., Torstensson, J. & Torstensson, R. 1997, "Growth effects of European integration", European Economic Review, vol. 41, pp. 1527-1557.
Kaitila, V. 2004, "Convergence of real GDP per capita in the EU15: how do the accession countries fit in", European network of Economic Policy Research Institutes, vol. Working Paper 25, pp. 1-34.
Lee, J.W. 1992, International Trade, Distortions, and Long-Run Economic Growth, International Monetary Fund, Research Department.
MacDonald, J.M. 1994, "Does Import Competition Force Efficient Production?", Review of Economics and Statistics, vol. 76, no. 4, pp. 721-727.
Maudos, J., Pastor, J.M. & Serrano, L. 1999, "Economic integration, efficiency and economic growth: the European Union experience", Applied Economics Letters, vol. 6, no. 6, pp. 389-392.
Modigliani, F. 1986, "Life Cycle, Individual Thrift, and the Wealth of Nations", American Economic Review, vol. 76, pp. 297-313.
Modigliani, F. & Brumberg, R. 1954, "Utility Analysis and the Consumption Function: An Interpretation of Cross-Section Data", Post-Keynesian Economics, vol. 388, pp. 436.
Pastor, J.M. & Serrano, L. 2008, "Permanent income, convergence and inequality among countries", Review of Income and Wealth, vol. 54, no. 1, pp. 105-115.
Philipson, T.J. & Soares, R. 2001, "Human Capital, Longevity, and Economic Growth: A Quantitative Assessment of Full Income Measures", Manuscript.
Quah, D.T. 1996, "Regional convergence clusters across Europe", European Economic Review, vol. 40, no. 3-5, pp. 951-958.
Reza, R. & Zahra, K.T. 2008, "Evaluation of the Income Convergence Hypothesis in Ten New Members of the European Union. A Panel Unit Root Approach", Panoeconomicus, vol. 2, pp. 157-166.
Serrano, L. 2006, "Convergencia y desigualdad en renta permanente y corriente. Factores determinantes", Fundación BBVA, Documento de Trabajo, vol. 12/06, pp. 1-33.
Schultz, T. P., 1998, "Inequality in the distribution of personal income in the world: How it is changing and why", Journal of Population Economics, vol. 11, pp. 307-344.
Stockhammer, E. 2009, "Effects of European integration on Austria's economy", International Review of Applied Economics, vol. 23, no. 1, pp. 19-40.
Viner, J. 1950, The Customs Union Issue, New York.