This study identifies convergence clubs based on district-level income per taxpayer
in Hungary and investigates how initial conditions and structural characteristics
affect clubs’ emergence. To do so, we perform a two-step procedure, using the log
t-test to delineate districts that converge towards the same steady-state condition,
and then employing ordinal logistic regression to analyse the role of factors that
influence club membership.
Our results demonstrate that no global convergence occurred in Hungarian districts
between 2001 and 2020 after verifying the presence of six convergence clubs. Our analyses
confirm the club convergence hypothesis, finding that clubs’ formation is primarily
influenced by initial conditions (initial income, human capital). Stable and
persistent inequalities are evident between clubs, which do not seem to be resolved
in the long run. The authors propose a clubspecific development toolkit to address
these inequalities.
