Sigma Convergence versus Beta Convergence: Evidence from U.S. County-Level Data

• Published in: Journal of money, credit and banking credit and banking, 2008-08, Vol.40 (5), p.1083-1093
• Main Authors: Young, Andrew T, Higgins, Matthew J, Levy, Daniel
• Format: Article
• Language: English
• Subjects: Analysis; balanced growth; Bank credit; beta-convergence; Comparative analysis; Convergence; Convergence (Social sciences); Counties; Differential equations, Linear; Economic growth; Economic growth rate; Economics and Finance; Empirical research; Estimation methods; Gini coefficient; Growth rates; Humanities and Social Sciences; Income distribution; income equality; Linear differential equations; Macroeconomics; Model testing; O11; O18; O40; Personal income; R11; Shorter Papers, Discussions, and Letters; sigma-convergence; Solow growth model; Solow model; speed of convergence; Standard deviation; Statistical significance; Statistical variance; Steady state economies; Studies; U.S. county-level data; U.S.A; United States economic conditions; β-convergence; σ-convergence
• ISSN: 1538-4616; 0022-2879; 1538-4616
• DOI: 10.1111/j.1538-4616.2008.00148.x

In this paper, we outline (i) why σ-convergence may not accompany β-convergence, (ii) discuss evidence of β-convergence in the United States, and (iii) use U.S. county-level data containing over 3,000 cross-sectional observations to demonstrate that σ-convergence cannot be detected at the county level across the United States, or within the large majority of the individual U.S. states considered separately. Indeed, in many cases statistically significant σ-divergence is found.