Still Growing Together? The Spatial Distribution and Industrial Composition of U.S. County GDP since 1870

We construct the first estimates of U.S. county nominal and real GDP by broadly defined industrial sectors from 1870 to 2018. Counties tended to converge from 1870 until 1970, but subsequently grew apart. Falling inequality between states explains most of the fall in county inequality from 1870 to 1970. After 1970, increasing inequality within states explains most of the overall inequality increase. Before 1970, more productive states were more equal, after 1970 more productive states were more unequal. U.S. geographic inequality is no longer primarily about differences between regions or states, but instead about differences within them. We show how the changing industrial composition affects inequality. The path to riches has changed from manufacturing to tradable services. From 1870 to 1950, manufacturing became increasingly concentrated in the richest counties. The manufacturing share is now the highest in middle income counties, while the richest counties increasingly produce tradable services. Manufacturing’s contribution to inequality is the largest before 1960 and its decline is the main explanation for the fall in inequality from 1930 to 1970, while the growth of tradable services and their concentration in top metropolitan areas contribute to the nominal inequality increase after 1970. Agriculture used to be the primary activity of the poorest counties. Now, the poorer the county, the larger the share in government, education, and health. Government services decrease county inequality. We show that population growth and education used to be strongly pro-convergence, but after 1970 became neutral or anti-convergence. At the same time, agglomeration effects in manufacturing and tradable services appear to have increased.