Income convergence among U.S. states: cross‐sectional and time series evidence

We perform convergence tests on the U.S. states for per capita income from 1930 to 2009. Cross‐sectional tests support overall σ‐convergence and β‐convergence but may not hold true for the last three decades. Time series tests suggest that about half of the states exhibit stochastic convergence and of these all are also β‐converging. Probit regressions reveal that the likelihood a state is converging is a function of changing capital to labour ratios, the size of the agricultural sector, and levels of taxation and tax revenue. Regional disparities in convergence remain among the southern and midwestern states.