Date Added: Feb 2011
The existence of agglomeration economies is well established. The authors study dynamic agglomeration effects and expect regional income divergence when people move from the periphery to cities. They use distribution analysis, Kernel density functions and first order Markov chains, to investigate whether data from Norwegian regions 1972-2008 with strong urbanization are consistent with agglomeration effects. The analysis shows overall income convergence, contrary to the hypothesis of agglomeration economies. Regions with large increases in population do not show systematic higher income growth.