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GEMF

Grupo de Estudos Monetários e Financeiros

Estudos do GEMF, N.º 11 de 2012

   

An European Distribution of Income Perspective on Portugal-EU Convergence


João Sousa Andrade

GEMF and Faculty of Economics, University of Coimbra

Adelaide Duarte
GEMF and Faculty of Economics, University of Coimbra

Marta Simões
GEMF and Faculty of Economics, University of Coimbra

Abstract:
Growth and real convergence in Portugal are usually analyzed after EU accession on January 1st 1986 based on real GDP per capita. There is however a lack of literature approaching the subject from an European distribution of income perspective and for a longer time period. We fill this gap by using all available time series information on real GDP per capita and population covering a longer period from 1950 until 2009 in order to get a broader picture of the convergence process. The analysis is based on the income distribution for the countries that compose the EU-14 group computed using each country’s mean income weighted by the respective population so that we have a distribution of income by individual. This cross-section distribution of income approach allows us to determine the shape of the distribution at each point in time and to study its evolution, and in this way to search for different convergence patterns, and thus analyze within a broader framework the Portuguese-EU convergence process. The results point to a bimodal EU-14 income distribution in 1950 and again in 2009, thus to two convergence clubs, and to two distinct convergence patterns over the whole period. From 1950 to 1974 convergence takes place, while from 1975 onwards it comes to a halt when considering the whole group. However, the same does not apply to Portugal from the 1980s until 2006, a country with a mean income lower than the EU-14 median income that continued to converge, although not necessarily due to European integration.

JEL Classification: O15, O52.

Keywords:
Real Convergence, Income Distribution, σ-convergence, Concentration and Inequality Measures.

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