Do Consumption Behaviors Converge ? A Regional Demand Side Analysis of Convergence Clubs

Abstract

The rapid progress of information and communication technologies and the improvements in road and air transport have increased not only the income levels but also the interaction of households with each other. Differences in consumption behaviors of the households across regions may be because of their income differences, if not due to their preferences. This study aims to investigate whether consumption behaviors converge together with income levels. For that purpose, we tried to identify the asymptotically perfect convergence clubs in household expenditures on 12 groups of goods and services as well as in their incomes for 26 NUTS-2 Turkish regions. The empirical results demonstrate a high number of convergence clubs, indicating a low level of convergence across the regions in terms of both consumption groups and income.