Do Standards of Living Converge? Some Cross-Country Evidence

This paper examines whether consumption per capita (a measure of the standard of living) converges across economies. In addition to the standard convergence test, which is known to be consistent only under implausible assumptions, the authors use a recently developed valid specification. In general, their estimates provide evidence against divergence of standards of living across countries. On the other hand, convergence of standards of living can be rejected for all but a sample of rich countries.