Wednesday, October 13, 2010: 11:55 AM
We perform convergence tests on the U.S. states (plus District of Columbia) for per capita income.
Cross-sectional tests support σ-convergence and β-convergence over the 70 year period 1930–-2000 but
may not hold true for the last two decades in isolation. Time series tests covering 1929–-2003 suggest that
26 of the 49 continental states exhibit stochastic convergence and of these all but one are in the process of,
or have already achieved, β-convergence. Probit regressions reveal that states with smaller farm sectors
and higher levels of government intervention, especially in the form of spending and taxation, and those
that are located in the midwestern and west regions of the nation, are significantly more likely to exhibit
convergence.
Cross-sectional tests support σ-convergence and β-convergence over the 70 year period 1930–-2000 but
may not hold true for the last two decades in isolation. Time series tests covering 1929–-2003 suggest that
26 of the 49 continental states exhibit stochastic convergence and of these all but one are in the process of,
or have already achieved, β-convergence. Probit regressions reveal that states with smaller farm sectors
and higher levels of government intervention, especially in the form of spending and taxation, and those
that are located in the midwestern and west regions of the nation, are significantly more likely to exhibit
convergence.