ARE US REGIONAL INCOMES CONVERGING - A TIME-SERIES ANALYSIS

The time series properties of per-capita income in U.S. regions are tested for consistency with the neoclassical growth model's prediction of per-capita income convergence. Two conditions are required for convergence. Shocks to relative regional per-capita incomes should be temporary (stochastic convergence), and initially poor regions should catch up to rich regions (beta-convergence). We find evidence for stochastic convergence across U.S. regions during the 1929-90 period after allowing for a trend break in 1946. We also find that U.S. regions have achieved beta-convergence. These findings support the neoclassical model's prediction of conditional convergence.