Jan Bentzen () and Valdemar Smith ()
Jan Bentzen: Department of Economics, Aarhus School of Business, Postal: Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Valdemar Smith: Department of Economics, Aarhus School of Business, Postal: Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Abstract: Using regional income data covering the time period since the early 1970s for all regions of
the Scandinavian countries the often addressed topic of income convergence is tested. The
empirical part of the paper applies different tests of convergence which are usually appearing
in connection with the question of convergence in relation to neoclassical growth models.
Following Sala-i-Martin the so-called beta-convergence test is applied but due to
methodological problems associated with this technique, alternative time series tests are also
considered. The newly introduced test by Nahar and Inder is applied to the income data,
where this methodology allows for a less restrictive interpretation of convergence in a time
series context compared to e.g. the Bernard-Durlauf unit root types of test. The time series
tests indicate that there is most support to the notion of absolute convergence in real incomes
among the regions of the Scandinavian countries in the sense that incomes converge towards
the region with the highest ‘leading’ income level (the 'leader').
20 pages, January 28, 2003
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