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Determinants of variations in state per capita personal income: a panel data approach

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  • Yihua Yu

Abstract

This article employs a panel data analysis to examine factors that affect variations in state real per capita personal income (PCPI) by using a panel of 48 contiguous US states over the period 1950-2000. The preferred Panel-Corrected Standard Errors (PCSE) approach reveals that the important explanatory variables are, respectively, the percentage of the population with a college education (COLLEGE), the percentage of the population with a high school education (HIGHSCHOOL), the percentage of the population employed in the manufacturing sector (MANUFACTURING), the percentage of population employed in the service sector (SERVICE) and the percentage of the population that was African American (BLACK). The results are found to be sensitive to estimation technique, suggesting formal model misspecification tests are required in order to choose an approach with better statistical properties.

Suggested Citation

  • Yihua Yu, 2010. "Determinants of variations in state per capita personal income: a panel data approach," Applied Economics Letters, Taylor & Francis Journals, vol. 17(3), pages 235-239, February.
    • Handle: RePEc:taf:apeclt:v:17:y:2010:i:3:p:235-239
    DOI: 10.1080/13504850701720213
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    1. Rubina Vohra, 1997. "An empirical investigation of forces influencing productivity and the rate of convergence among states," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 25(4), pages 412-419, December.
    2. Beck, Nathaniel & Katz, Jonathan N., 1995. "What To Do (and Not to Do) with Time-Series Cross-Section Data," American Political Science Review, Cambridge University Press, vol. 89(3), pages 634-647, September.
    3. Anya M. McGuirk & Paul Driscoll & Jeffrey Alwang, 1993. "Misspecification Testing: A Comprehensive Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 1044-1055.
    4. David M. Drukker, 2003. "Testing for serial correlation in linear panel-data models," Stata Journal, StataCorp LP, vol. 3(2), pages 168-177, June.
    5. repec:rre:publsh:v:34:y:2004:i:2:p:206-220 is not listed on IDEAS
    6. Bishop, John A & Formby, John P & Thistle, Paul D, 1992. "Explaining Interstate Variation in Income Inequality," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 553-557, August.
    7. Helmut Hofer & Andreas Worgotter, 1997. "Regional Per Capita Income Convergence in Austria," Regional Studies, Taylor & Francis Journals, vol. 31(1), pages 1-12.
    8. Paul W. Bauer & Mark E. Schweitzer & Scott Shane, 2006. "State growth empirics: the long-run determinants of state income growth," Working Papers (Old Series) 0606, Federal Reserve Bank of Cleveland.
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    1. Ben Salha, Ousama, 2013. "Does economic globalization affect the level and volatility of labor demand by skill? New insights from the Tunisian manufacturing industries," Economic Systems, Elsevier, vol. 37(4), pages 572-597.

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