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Convergence in Income Inequality: Further Evidence from the Club Clustering Methodology across the U.S. States

Listed author(s):
  • Nicholas Apergis

    (University of Piraeus)

  • Christina Christou

    (University of Piraeus)

  • Rangan Gupta

    (University of Pretoria)

  • Stephen M. Miller

    (University of Nevada, Las Vegas and University of Connecticut)

This paper contributes to the sparse literature on inequality convergence by empirically testing convergence across the U.S. States. This sample period encompasses a series of different periods that are discussed in the existing literature -- the Great Depression (1929-1944), the Great Compression (1945-1979), the Great Divergence (1980-present), the Great Moderation (1982-2007), and the Great Recession (2007-2009). This paper implements the relatively new methodology of panel convergence testing, recommended by Phillips and Sul (2007). This method examines the club convergence hypothesis, which argues that certain countries, states, sectors, or regions belong to a club that moves from disequilibrium positions to their club-specific steady-state positions. We find strong support for convergence through the late 1970s and early 1980s and then evidence of divergence. The divergence, however, moves the dispersion of inequality measures across states only a fraction of the way back to their levels in the early part of the 20th Century.

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File URL: http://web2.uconn.edu/economics/working/2016-19.pdf
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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2016-19.

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Length: 36 pages
Date of creation: Sep 2016
Handle: RePEc:uct:uconnp:2016-19
Note: Stephen Miller is the corresponding author
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Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/

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