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

Convergence in Income Inequality: Further Evidence from the Club Clustering Methodology across... 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Advances in Economic Research Springer Journals

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

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Publisher
Springer Journals
Copyright
Copyright © 2018 by International Atlantic Economic Society
Subject
Economics; Economics, general; Macroeconomics/Monetary Economics//Financial Economics; International Economics; Microeconomics; Economic Growth
ISSN
1083-0898
eISSN
1573-966X
D.O.I.
10.1007/s11294-018-9675-y
Publisher site
See Article on Publisher Site

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.

Journal

International Advances in Economic ResearchSpringer Journals

Published: Mar 20, 2018

References

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