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Growing Together? Projecting Income Growth in Europe at the Regional Level

Author

Listed:
  • Crespo Cuaresma, Jesus
  • Doppelhofer, Gernot
  • Huber, Florian
  • Piribauer, Philipp
Abstract
In this paper we present an econometric framework aimed at obtaining projections of income growth in Europe at the regional level. We account for model uncertainty in terms of the choice of explanatory variables, as well as the nature of the spatial spillovers of output growth and human capital investment. Building on recent advances in Bayesian model averaging, we construct projected trajectories of income and human capital simultaneously, while integrating out the effects of other covariates. This approach allows us to assess the potential contribution of future educational attainment to economic growth and income convergence among European regions over the next decades. Our findings suggest that income convergence dynamics and human capital act as important drivers of income growth for the decades to come. In addition we find that the relative return of improving educational attainment levels in terms of economic growth appears to be higher in peripheral European regions. (authors' abstract)

Suggested Citation

  • Crespo Cuaresma, Jesus & Doppelhofer, Gernot & Huber, Florian & Piribauer, Philipp, 2015. "Growing Together? Projecting Income Growth in Europe at the Regional Level," Department of Economics Working Paper Series 198, WU Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wus005:4583
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    File URL: https://epub.wu.ac.at/4583/
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    References listed on IDEAS

    as
    1. James Lesage & Manfred Fischer, 2008. "Spatial Growth Regressions: Model Specification, Estimation and Interpretation," Spatial Economic Analysis, Taylor & Francis Journals, vol. 3(3), pages 275-304.
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    4. Jesús Crespo Cuaresma & Gernot Doppelhofer & Martin Feldkircher, 2014. "The Determinants of Economic Growth in European Regions," Regional Studies, Taylor & Francis Journals, vol. 48(1), pages 44-67, January.
    5. Carmen Fernandez & Eduardo Ley & Mark F. J. Steel, 2001. "Model uncertainty in cross-country growth regressions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(5), pages 563-576.
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    8. Fernandez, Carmen & Ley, Eduardo & Steel, Mark F. J., 2001. "Benchmark priors for Bayesian model averaging," Journal of Econometrics, Elsevier, vol. 100(2), pages 381-427, February.
    9. Cem Ertur & James Lesage, 2006. "Local versus global convergence in Europe : a bayesian spatial econometric approach," Post-Print hal-00485025, HAL.
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    12. Ley, Eduardo & Steel, Mark F.J., 2007. "Jointness in Bayesian variable selection with applications to growth regression," Journal of Macroeconomics, Elsevier, vol. 29(3), pages 476-493, September.
    13. Cem Ertur & Wilfried Koch, 2007. "Growth, technological interdependence and spatial externalities: theory and evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(6), pages 1033-1062.
    14. Jesús Crespo Cuaresma & Martin Feldkircher, 2013. "Spatial Filtering, Model Uncertainty And The Speed Of Income Convergence In Europe," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 720-741, June.
    15. R. Kelley Pace & James P. Lesage & Shuang Zhu, 2013. "Interpretation and Computation of Estimates from Regression Models using Spatial Filtering," Spatial Economic Analysis, Taylor & Francis Journals, vol. 8(3), pages 352-369, September.
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    More about this item

    Keywords

    Income projections; model uncertainty; spatial filtering; European regions;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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