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Short-Run Dynamics of Income Disparities and Regional Cycle Synchronization in the U.S

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  • Hasan Engin Duran

Abstract

Since the 1990s, the issue of regional income convergence and its long-term tendencies has been thoroughly and heatedly discussed. Much less attention, however, has been devoted to the short-run dynamics of regional convergence. In particular, three important aspects have not yet been adequately addressed. First, it is indeed essential to understand whether regional disparities manifest a tendency to move systematically along the national cycle. Then, if this happens to be the case, it becomes crucial to know whether 1) these movements are pro- or counter-cyclical,2) the cyclical evolution of the disparities is a consequence of differences in the timing with which the business cycle is felt in regions or it is motivated by the amplitude differences across local cyclical swings. In this paper, we shed light on these issues using data on personal income for the 48 coterminous U.S. states between 1969 and 2008. Our results indicate that income disparities do not move randomly in the short run but follow a distinct cyclical pattern, moving either pro- or counter-cyclically depending on the period of analysis. These patterns are probably explained by the changes in the direction of capital and labor flows that favor developed or poorer states in different periods. As for the underlying mechanism, it appears that the short-run evolution of the disparities in recent years is largely a consequence of differences in the timing with which the business cycle is felt across states rather than the outcome of amplitude differences across local cyclical swings.

Suggested Citation

  • Hasan Engin Duran, 2014. "Short-Run Dynamics of Income Disparities and Regional Cycle Synchronization in the U.S," Growth and Change, Wiley Blackwell, vol. 45(2), pages 292-332, June.
  • Handle: RePEc:bla:growch:v:45:y:2014:i:2:p:292-332
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    File URL: http://hdl.handle.net/10.1111/grow.12040
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    Cited by:

    1. Hasan Engin Duran, 2015. "Dynamics of Business Cycle Synchronization in Turkey," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(5), pages 581-606, December.
    2. Hasan Engin Duran & Alexandra Ferreira-Lopes, 2017. "Determinants of co-movement and of lead and lag behavior of business cycles in the Eurozone," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(2), pages 255-282, March.
    3. repec:bla:tvecsg:v:107:y:2016:i:5:p:628-641 is not listed on IDEAS
    4. Hasan Engin Duran, 2015. "Regional Employment Volatility In Turkey: Causes And Consequences," Working Papers 2015/06, Turkish Economic Association.

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