Labour's reward across regions of the EU: a distributional dynamic approach

Abstract

A large number of empirical studies have tested for the presence of convergence for a variety of economic variables. This paper examines the evolution of labour's reward across regions of the EU to identify whether factor price convergence has occurred. Density diagrams are used to illustrate static distributions while transitional matrices are employed to identify movements of the distribution over time. The results presented suggest that the evolutionary paths of average regional pay are fairly stable with stratification and persistence identified as important characteristics. There was uninterrupted convergence of average regional pay between 1980–1992. However, between 1992–1994 this process reversed.