Per capita incomes across European regions are not equal and do not st
ay constant; regional income distributions fluctuate over time. Such a
process could have many possible limiting outcomes: complete equality
(convergence), stratification, and continually increasing inequality
are but three distinct possibilities. This paper asks if nation-state,
macro factors and physical-geography spillover effects help explain t
he observed distribution dynamics across European regions. Geographica
l factors are found to matter more than national ones; but both are im
portant for explaining inequality dynamics.