Abstract
We present a simple reproducible methodology for constructing regional capital stock data, which we apply to Israel. We find that capital deepening has been sigma-convergent since 1985. This process is “inverted” since capital stocks and capital–labor ratios in the richer center have been catching-up with their counterparts in the poorer periphery. We explain this phenomenon in terms of fundamental changes in regional policy. Despite this, regional wages have not been sigma-convergent because other wage determinants have been sigma-divergent.
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Beenstock, M., Felsenstein, D. & Ben Zeev, N. Capital deepening and regional inequality: an empirical analysis. Ann Reg Sci 47, 599–617 (2011). https://doi.org/10.1007/s00168-010-0397-1
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DOI: https://doi.org/10.1007/s00168-010-0397-1