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Convergence in Income Inequality: Further Evidence from the Club Clustering Methodology across States in the U.S

Nicholas Apergis (), Christina Christou, Rangan Gupta () and Stephen Miller ()
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Christina Christou: Open University of Cyprus

International Advances in Economic Research, 2018, vol. 24, issue 2, 147-161

Abstract: Abstract This paper contributes to the sparse literature on inequality convergence by empirically testing convergence across states in the U.S. This sample period encompasses a series of different periods that the existing literature discusses -- the Great Depression (1929–1944), the Great Compression (1945–1979), the Great Divergence (1980-present), the Great Moderation (1982–2007), and the Great Recession (2007–2009). This paper implements the relatively new method of panel convergence testing, recommended by Phillips and Sul (2007). This method examines the club convergence hypothesis, which argues that certain countries, states, sectors, or regions belong to a club that moves from disequilibrium positions to their club-specific steady-state positions. We find strong support for convergence through the late 1970s and early 1980s, and then evidence of divergence. The divergence, however, moves the dispersion of inequality measures across states only a fraction of the way back to their levels in the early part of the twentieth century.

Keywords: Club convergence; Inequality measures; Panel data; U.S. (search for similar items in EconPapers)
JEL-codes: C22 D63 (search for similar items in EconPapers)
Date: 2018
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