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Discontinuity Of Output Convergence Within The United States: Why Has The Course Changed?

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  • Chi‐Young Choi
  • Xiaojun Wang

Abstract

Has the progress of output convergence changed within the United States? This article examines the output convergence among U.S. states for the last five decades by making several improvements over the extant literature. By applying a battery of convergence tests designed to capture nonlinear transitional dynamics to real output per worker data (i.e., nominal values deflated by state‐level price), we find that output convergence has not been a feature of the continental United States since the 1970s. Instead, output convergence has proceeded among four subgroups within which constituent states have certain characteristics in common. Our regression analysis suggests that state‐level characteristics related to technology and human capital play a crucial role in accounting for the formation and composition of convergence clubs, in agreement with the recent theoretical models of growth and development (e.g., Aghion et al. 2009; Gennaioli et al. 2013b). The level of technology, proxied by patents, turns out to be a consistently significant determinant even after controlling for endogeneity, suggesting that frictions in the diffusion of technology and human capital may have led to clustering of states with different levels of productivity. Our results therefore cast doubt on the common view that diffusion of knowledge and technology across state borders is frictionless. (JEL O47, O51)

Suggested Citation

  • Chi‐Young Choi & Xiaojun Wang, 2015. "Discontinuity Of Output Convergence Within The United States: Why Has The Course Changed?," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 49-71, January.
    • Handle: RePEc:bla:ecinqu:v:53:y:2015:i:1:p:49-71
    DOI: 10.1111/ecin.12129
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    Citations

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    Cited by:

    1. Klein, Alexander & Crafts, Nicholas, 2023. "Unconditional Convergence in Manufacturing Productivity across U.S. States: What the Long-Run Data Show," CEPR Discussion Papers 18065, C.E.P.R. Discussion Papers.
    2. Kryszak, Łukasz, 2020. "Income Convergence In The Agricultural Sector In The Context Of The European Union’S Common Agricultural Policy," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2020(3).
    3. Arčabić, Vladimir & Kim, Kyoung Tae & You, Yu & Lee, Junsoo, 2021. "Century-long dynamics and convergence of income inequality among the US states," Economic Modelling, Elsevier, vol. 101(C).
    4. Mateusz Tomal & Agata Gumieniak, 2020. "Agricultural Land Price Convergence: Evidence from Polish Provinces," Agriculture, MDPI, vol. 10(5), pages 1-20, May.
    5. Matsuki, Takashi, 2019. "Per capita output convergence across Asian countries: Evidence from covariate unit root test with an endogenous structural break," Economic Modelling, Elsevier, vol. 82(C), pages 99-118.
    6. Chi‐Young Choi & Horag Choi & Alexander Chudik, 2020. "Regional inequality in the U.S.: Evidence from city‐level purchasing power," Journal of Regional Science, Wiley Blackwell, vol. 60(4), pages 738-774, September.
    7. Stilianos Alexiadis & Konstantinos Eleftheriou & Peter Nijkamp, 2021. "Club convergence of per capita disposable income in the United States," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1565-1580, October.
    8. Paul Johnson & Chris Papageorgiou, 2020. "What Remains of Cross-Country Convergence?," Journal of Economic Literature, American Economic Association, vol. 58(1), pages 129-175, March.
    9. Fabio Mazzola & Pietro Pizzuto, 2020. "Great Recession and club convergence in Europe: A cross‐country, cross‐region panel analysis (2000–2015)," Growth and Change, Wiley Blackwell, vol. 51(2), pages 676-711, June.
    10. Barrios González, María Candelaria & Tierney, Heather L.R. & Nazarov, Zafar & Kim, Myeong Hwan, 2019. "Divided: The Two Americas-Examining Club Convergence in the U.S," MPRA Paper 98274, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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