Convergence Across States and Regions

Abstract

In this paper we examine the growth and dispersion of personal income in U.S. states and regions since 1880 and relate the patterns for individual states to the behavior of regions.Then we analyze the interplay between net migration and economic growth.We study the evolution of gross state product since 1963 and relate the behavior of aggregate product to productivity in eight major sectors.The overall evidence weighs heavily in favor of convergence: poor states tend to grow faster in terms of per capita income and product and within sectors as well as for state aggregates.The rate of convergence is, however, not rapid: the gap between the typical poor and rich state diminishes at roughly 2% per year.We apply the same framework to patterns of convergence across 73 regions of seven European countries since 1950.The process of convergence within European countries is similar to that for the United States.In particular, the rate of convergence is again about 2% per year.