SPATIAL EFFECTS ON PROVINCIAL CONVERGENCE AND INCOME DISTRIBUTION IN SPAIN: 1985–2003

ABSTRACT This paper examines the role of space (geographical location) in provincial income convergence and income distribution in Spain. To do that, and after showing the presence of spatial dependence in our income data, the paper compares two sample series: actual versus filtered (spaceless) data. The comparison of these two series comes out to two important differences: first, the speed of convergence is higher and, second, the income distribution is more concentrated (less biased) around the national average with filtered data. Besides this, the paper also shows that geographical location particularly explains relative income improvement in provinces with per capita income slightly above average. These results confirm that, as for Spain, space does indeed matter.