Income Distribution and Convergence: the European Experience, 1870-1992

Abstract

Economic convergence has emerged as one of the key debates in the theoretical and historical literature over the last decade.1 Galor identified three forms of long run per capita income convergence: absolute convergence, whereby convergence occurs independently of the initial conditions facing each economy; conditional convergence, whereby convergence occurs among economies which have identical structural characteristics, independently of their initial conditions; and club convergence, whereby convergence occurs only if the structural characteristics are identical and initial conditions are also similar.2 Of these, the absolute convergence hypothesis has been discredited whereas there is empirical support for both the conditional convergence and club convergence hypotheses. The club convergence hypothesis, in particular, has much to offer to economic historians. It stresses the importance of both the initial conditions facing each economy and the structural and institutional features of the economy (e.g. preferences, technologies, rates of population growth, government policies, etc.).

Full Text (PDF format, 29 pages, 81.7kbs)