Working Paper

Re-examining Regional Income Convergence: A Distributional Approach

Abstract: We re-examine recent trends in regional income convergence, considering the full distribution of income rather than focusing on the mean. Measuring similarity by comparing each percentile of state distributions to the corresponding percentile of the national distribution, we find that state incomes have become less similar (i.e. they have diverged) within the top 20 percent of the income distribution since 1969. The top percentile alone accounts for more than half of aggregate divergence across states over this period by our measure, and the top five percentiles combine to account for 93 percent. Divergence in top incomes across states appears to be driven largely by changes in top incomes among White people, while top incomes among Black people have experienced relatively little divergence.

Keywords: Wages; Regional convergence; Distribution; Income; Race;

JEL Classification: J30; R10;

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Bibliographic Information

Provider: Federal Reserve Bank of Minneapolis

Part of Series: Opportunity and Inclusive Growth Institute Working Papers

Publication Date: 2023-03-09

Number: 065