A New Approach for Analysing Income Convergence across Countries

In this paper we develop a coherent framework that integrates both traditional measures of -convergence and -convergence within a study of cross-country income dynamics. To do this we exploit the close links that exist between studies of income mobility and studies analysing the progressivity of the tax system. We also develop a welfare interpretation for the concept of -convergence, which distinguishes it from the more general form of -convergence and which also suggests that the -process may be worthy of independent study. We illustrate our approach using data for the period 1960-2000. a We would like to thank Gerry Boyle, Olive Sweetman, Dirk van de gaer and seminar participants at the Dublin Economics Workshop (Trinity College Dublin) for helpful comments on an earlier draft of this paper. * Economics Dept., NUI Maynooth, Maynooth, Co. Kildare,Ireland, [email protected] ** CEPS/INSTEAD G.-D Luxembourg, [email protected]