Structural shifts in the dynamics of the European income distribution

This paper aims to evaluate structural shifts in the regional per capita income distribution in Europe between the periods 1980-1993 and 1993-2005. After a brief analysis of several aspects of the distribution (inequality, external shape, polarisation and spatial dependence), we focus on intra-distribution dynamics by applying a novel causative matrix model that reveals strong structural shifts. In particular, increase in relative persistence during the second period has been the major change, especially for regions around the average and those at the upper end of the income distribution.