CONVERGENCE ANALYSIS OF PER CAPITA INCOME IN MUNICIPALITIES IN THE SOUTH REGION OF BRAZIL BETWEEN 1999 AND 2014

Abstract

This paper aims to identify possible changes in the disparity of income between the municipalities in southern Brazil, for the period from 1999 to 2014. We used a panel data analysis of the municipalities and observed whether the income differences showed a decreasing pattern. The model used two of the three main types of convergence - absolute, conditional, and club - focusing on absolute and conditional income convergence. The model was estimated twice, aggregating the municipalities in southern Brazil and aggregating the same municipalities per state of the region. The hypothesis of per capita income convergence was confirmed with statistically significant evidence for absolute and conditional convergence, both when considering the municipalities aggregated in the region and per state. In the analysis of the municipalities aggregated per state, the state of Santa Catarina had the highest speed of absolute income convergence. In contrast, the state of Rio Grande do Sul had the highest speed in the conditional convergence.