Century-long dynamics and convergence of income inequality among the US states

Vladimir Arčabić, Kyoung Tae Kim, Yu You and Junsoo Lee ()

Economic Modelling, 2021, vol. 101, issue C

Abstract: This paper analyzes convergence in income inequality among US states using century-long data from 1917 to 2012. Levels of inequality substantially differ among US states, and convergence analysis examines whether those differences have decreased over time. We show weak evidence of inequality convergence from 1917 to 2012. Convergence is found only in the 1932–1985 subsample. Subsample analysis shows divergence in the 1917–1931 and 1986–2012 subsamples, where we find different convergence clubs. Lack of convergence, or the existence of various convergence clubs, suggests that some US states approach different steady states in the long run. These convergence clubs are mainly determined by human capital and government policies. We find that redistributive policies and easy access to education reduce inequality; capital gains tax is also an efficient policy measure.

Keywords: Inequality; Convergence clubs; log t-test; Inequality determinants; Pairwise unit root tests; Structural breaks (search for similar items in EconPapers)
JEL-codes: C22 C33 D63 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999321001152
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:101:y:2021:i:c:s0264999321001152

DOI: 10.1016/j.econmod.2021.105526

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().