Capital deepening and regional inequality: An empirical analysis

Michael Beenstock, Daniel Felsenstein*, Nadav Ben Zeev

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

18 Scopus citations


We present a simple reproducible methodology for constructing regional capital stock data, which we apply to Israel. We find that capital deepening has been sigma-convergent since 1985. This process is "inverted" since capital stocks and capital-labor ratios in the richer center have been catching-up with their counterparts in the poorer periphery. We explain this phenomenon in terms of fundamental changes in regional policy. Despite this, regional wages have not been sigma-convergent because other wage determinants have been sigma-divergent.

Original languageAmerican English
Pages (from-to)599-617
Number of pages19
JournalAnnals of Regional Science
Issue number3
StatePublished - Dec 2011


  • O18
  • R11
  • R53


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