This paper applies the statistical concepts of σ-convergence and unconditional

β-convergence to institutional development within several country groups hierarchized to

the degree of European integration (e.g., euro area). Two sets of indicators are employed

to measure institutional development: first, the Worldwide Governance Indicators, and

second, the product market regulation indicator of the OECD and the Doing Business

distance to frontier indicator of the World Bank. The authors can clearly confirm

institutional β-convergence within the EU and its aspirants, which is mainly driven by the

new Member States and acceding, candidate, and potential candidate countries. However,

euro-area countries converge only in the area of product market and business regulation—

not in the area of governance. In fact, the authors show evidence for β-divergence in rule

of law within the first twelve euro-area members. Concerning σ-convergence, the results

are less clear. Only the EU including the EU-aspirants reduced the cross-country variance

in all aspects of institutional development.