beta convergence in Finland: regional differences in speed of convergence

This paper estimates β convergence across the 88 Finnish small-scale subregions from 1934 to 1993 using taxable per capita income as an indicator of income level. The results resemble those obtained in other studies for larger areas: regional β convergence in Finland has been about 2% per year in the long run, whereas in the short run β has tended to be unstable. Furthermore, this paper finds that it is possible to identify regional factors which tend to determine growth rates and steady-state income levels. These determinants are found to affect regions' individual β convergences. The steady-state level and speed of a region's individual β seems to be inversely related: the higher the β the lower the steady-state level.