Regional Income Convergence in Sweden, 1911-2003: A Time Series Analysis

The issue of income convergence is important for policy makers' regional strategies aimed at redistributing funds to poorer regions in a country. We investigate the growth and convergence characteristics of 24 Swedish counties during the period 1911-2003. Using time series techniques, we find that shocks to relative county per capita incomes are temporary, and that initially poor (rich) counties tend to experience higher (lower) growth rates than the nation as whole. Our findings are consistent with the neoclassical model's prediction of conditional convergence, and imply that market forces rather than interregional government redistribution are the main drivers behind our results.