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Growth and Convergence across the US: Evidence from County-Level Data

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Matthew Higgins ()
Daniel Levy ()
Andrew Young ()

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Abstract

We use U.S. county-level data consisting of 3,058 observations, to study growth determination and measure the speed of income convergence. County-level data are particularly valuable for studying convergence because they allow us to study a sample with substantial homogeneity and exceptional mobility of capital, labor and technology without sacrificing the benefits of a large number of cross-sectional units. Our data set allows us to include nearly 40 different conditioning variables to study their effect on the counties' balanced growth paths. We report estimates using a 2SLS instrumental variables method which yields consistent estimates, as well as estimates from standard OLS. In order to explore possible heterogeneity in the conditional convergence rates, we report the estimates for the entire data set as well as for subsets including metro counties, non-metro counties, and five regional groupings. Our findings include: (i) while OLS yields convergence rates around 2 percent, the 2SLS method yields rates between 6 and 8 percent; (ii) the estimated convergence rates are not constant across the U.S., for example, the counties in the Southern states converge at a rate that is more than two and half times faster than the counties located in the New England states; (iii) the extent of the public sector at all levels (federal, state and local) negatively affects growth and there is no evidence of the public sector becoming more productive at more decentralized levels; (iv) the relationship between a population’s educational attainment and economic growth is nonlinear depending on the years of education considered; and (v) large presences of both finance, insurance and real estate industry and entertainment industry are positively correlated with growth while the percent of a county's population employed in the education industry is negatively correlated with economic growth.

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Paper provided by Department of Economics, Emory University (Atlanta) in its series Emory Economics with number 0306.

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Date of creation: Apr 2003
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Handle: RePEc:emo:wp2003:0306

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Andrew Young & Matthew Higgins & Daniel Levy, 2004. "Heterogeneity in Convergence Rates and Income Determination across U.S. States: Evidence from County-Level Data," Development and Comp Systems 0402003, EconWPA. [Downloadable!]
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  2. Young, Andrew & Higgins, Matthew & Levy, Daniel, 2007. "Black Populations and Economic Growth: An Extreme Bounds Analysis of Mississippi County-Level Data," MPRA Paper 1646, University Library of Munich, Germany. [Downloadable!]
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  3. Matthew J. Higgins & Daniel Levy & Andrew T. Young, 2006. "Heterogeneous Convergence," Emory Economics 0615, Department of Economics, Emory University (Atlanta). [Downloadable!]
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  4. Andrew Young & Matthew Higgins & Daniel Levy, 2005. "Sigma-Convergence Versus Beta-Convergence: Evidence from U.S. County-Level Data," Macroeconomics 0505008, EconWPA. [Downloadable!]
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  5. Matthew Higgins & Daniel Levy & Andrew Young, 2003. "Sigma Convergence Versus Beta Convergence: Evidence from County-Level Data," Emory Economics 0316, Department of Economics, Emory University (Atlanta). [Downloadable!]
  6. Higgins, Matthew & Young, Andrew & Levy, Daniel, 2007. "Robust Correlates of County-Level Growth in the U.S," MPRA Paper 3088, University Library of Munich, Germany. [Downloadable!]
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  7. Yogi Vidyattama, 2007. "The Determinants of Provincial Growth in Indonesia During 1983-2003," DEGIT Conference Papers c012_044, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  8. Paul W. Bauer & Mark E. Schweitzer & Scott Shane, 2006. "State growth empirics: the long-run determinants of state income growth," Working Paper 0606, Federal Reserve Bank of Cleveland. [Downloadable!]
  9. Mihai Nica, 2004. "Convergence in Mississippi: A Spatial Approach," Urban/Regional 0408007, EconWPA. [Downloadable!]
  10. Matthew Higgins & Daniel Levy & Andrew Young, 2004. "Many Types of Human Capital and Many Roles in U.S. Growth: Evidence from County-Level Educational Attainment Data," Emory Economics 0402, Department of Economics, Emory University (Atlanta). [Downloadable!]
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  11. David E. A. Giles & Chad Stroomer, 2003. "Does Trade Openness Affect the Speed of Output Convergence? Some Empirical Evidence," Econometrics Working Papers 0307, Department of Economics, University of Victoria. [Downloadable!]
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  12. Marcel Fafchamps & Klaus Desmet, 2003. "Employment Concentration across US Counties," Economics Series Working Papers 180, University of Oxford, Department of Economics. [Downloadable!]
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