Regional Convergence in Chile: New Tests, Old Results

convergence tests implicitly test the unit root hypothesis for per capita income. although the statistics do not have critical values under the null hypothesis most papers on this subject use them, with the corresponding problems for inference. this paper determines the existence of convergence in gdp levels and income across the regions of chile using the traditional tests and also recent unit root tests for panel data that allow for correct inferences. we also analyze convergence in dispersion, evaluating the presence of asymmetries or the formation of regional "clubs" using nonparametric tests. our main conclusions are: (1) the evidence supports the hypothesis of absolute b convergence in both per capita gdp and income; (2) the convergence rate is higher for income than for gdp; (3) the conditional convergence rate increases when we control for the share of mining on the regional productive structure; (4) the data do not support the existence of convergence clubs; and (5) there is no clear evidence of s convergence