Short‐Run Dynamics of Income Disparities and Regional Cycle Synchronization in the U.S.

Since the 1990s, the issue of regional income convergence and its long‐term tendencies has been thoroughly and heatedly discussed. Much less attention, however, has been devoted to the short‐run dynamics of regional convergence. In particular, three important aspects have not yet been adequately addressed. First, it is indeed essential to understand whether regional disparities manifest a tendency to move systematically along the national cycle. Then, if this happens to be the case, it becomes crucial to know whether 1) these movements are pro‐ or counter‐cyclical,2) the cyclical evolution of the disparities is a consequence of differences in the timing with which the business cycle is felt in regions or it is motivated by the amplitude differences across local cyclical swings. In this paper, we shed light on these issues using data on personal income for the 48 coterminous U.S. states between 1969 and 2008. Our results indicate that income disparities do not move randomly in the short run but follow a distinct cyclical pattern, moving either pro‐ or counter‐cyclically depending on the period of analysis. These patterns are probably explained by the changes in the direction of capital and labor flows that favor developed or poorer states in different periods. As for the underlying mechanism, it appears that the short‐run evolution of the disparities in recent years is largely a consequence of differences in the timing with which the business cycle is felt across states rather than the outcome of amplitude differences across local cyclical swings.     

Estimating Employment‐Related Migration from Overlapping Migration and Commuting Networks

A U.S. county workplace‐to‐workplace or latent migration data set is generated from overlapping migration and commuting networks. The latent migration network is the estimated number of movers between places of work, which is then compared with the actual number of migrants between places of residence. This allows both employment‐related and amenity‐related migration and pull/push factors as causes of migration flows to be identified and contrasted. Certain counties and cities that are not important migration destinations (e.g., with <200,000 net in‐migrants between 1995 and 2000) according to official data are in fact important targets when additional in‐migrants who commute into surrounding counties also are considered. An econometric analysis is then used to examine whether different regressors have different effects on the residence‐ versus employment‐based migration patterns. This is a first assessment of whether or not the proposed approach has merit. Results are consistent with prior expectations regarding the factors that would motivate latent versus actual migration.     

U.S. Farm Wages and Labor Market Efficiency

This study examines convergence in real wages for hired farm labor in the U.S. agricultural sector over the period 1978‐92,using the ‘average farm’ in each county as an observation. Convergence is investigated at the aggregate (or the entire U.S. level)and regional levels. Evidence supports convergence with a slower rate at the aggregate level than that at the regional level. Suggested by the evidence is the possibility that absolute benefits of wage equalization across states are ‘contagious’—that one state's successful investment raises productivity and factor payments in neighboring states and that agricultural labor markets are efficient and integrated all over the country.     

Race,Place, and the Persisting Income Divide in the U.S. Southeast, 2000–2014

Despite economic growth since the recession, the gap between the richest and the poorest segments of the population remains one of the most pressing concerns of contemporary America. This paper uses IR‐95/20, IR‐80/20, and IR‐65/35 ratios to measure the income divides between the richest and the poorest segments in the mid‐to‐large‐sized metropolises of the U.S. Southeast, their variation across ethnicities, and their association with metropolitan level attributes such as diversity, segregation, socio‐economic, and other built‐environment, and labor characteristics. The income divide ratios serve as the dependent variables whereas principal components along with state‐dummy variables serve as the explanatory variables in regressions analyses. The metropolises that are large, diverse, and better educated are the most income‐divided whereas those with lower educated people are less divided. Metropolises with larger shares of their labor engaged in primary sectors of economy have higher income divides; this observation also holds true for African Americans and Hispanics. Metropolises that gained in intermixing during 2000–2014 are associated with a lower income divide and vice versa.     

Does Casino Development Have a Positive Effect on Economic Growth?

This study examines the relationship between casinos and economic growth in the U.S. Using county‐level data on the 48 contiguous states from 2003 to 2012, we estimate the effect of casinos on per capita income growth and job creation. Our research procedures include examining the relationship using level‐to‐level panel data, and 3‐year and 10‐year differenced data. An instrumental variable approach is also considered to account for potential endogeneity of the casino variable. Although, the instruments are both relevant and exogenous, test results found insufficient evidence of endogeneity in our panel data models. In addition, we estimate a spatial error model (SEM) to account for the unobserved spatial characteristics that may affect economic growth in the counties but are not captured by our conventional econometric models. Our results show that casinos had a positive effect on per capita income; casino expansions exerted a small, positive effect on both per capita income growth and job growth. However, the effect of casino expansions on 10‐year per capita income growth dissipated when we controlled for the spatial autocorrelation in our model. Nevertheless, the SEMs results also suggest that casino expansions continued to have a positive effect on the 2003–2012 job growth.     

Income Divergence between Mexican States in the 1990s: The Role of Skill Premium

ABSTRACT During the period 1940–1985 the variance of average incomes across Mexican states fell by 60 percent. Beginning in 1985, however, and coinciding with the adoption of trade liberalization policies and other market‐oriented reforms, state incomes began to diverge. Using microdata from the 1990 and 2000 Mexican Population Censuses, this study decomposes the recent divergence into components due to economy‐wide changes in skill prices and components due to state‐specific changes in the composition of workers. The study finds that the rise in the education premium hindered the progress of poor states and raised the variance of average state wages and labor earnings. However, educational attainment mostly compensated for this income‐widening effect. State‐level regressions reveal that the initial level of education, size of the agricultural sector, and distance from the U.S. border were important factors, while public infrastructure was not. While the border states clearly benefited from increased trade and opening of the economy, I find no evidence that skill demand or the immigration of highly educated workers particularly favored these states.     

Maquiladoras and U.S.‐Bound Migration in Central Mexico

Over the past one and a half decades, smaller cities and nonmetropolitan areas in Mexico have attracted manufacturing plants, led by the export manufacturing sector. Maquiladoras in particular are increasingly locating their plants in such places in the “deep interior” Mexico—outside of the border states. Using 1980 and 1990 Mexican census data for 19 growth centers and 27 high‐emigration municipios (counties) in Central Mexico, this paper suggests that foreign‐owned assembly (maquiladora) jobs decentralized significantly over the 1980s, locating closer to emigrant municipios. An examination of 17 emigrant municipios in the industrialized states of Jalisco and Guanajuato found that an emigrant municipio's accessibility to maquiladora jobs, and jobs indirectly related to maquiladora growth, was positively related to its overall employment growth, which was, in turn, negatively related to its U.S. migration rate over the decade. Although the migration reduction inherent in these relationships is relatively small, it could be accelerated by U.S. and Mexican policies giving incentives for more peripheral locations of export‐oriented and other manufacturing.     

The Influence of Booms and Busts in the U.S. Economy on the Interstate Migration System

Migration flows around the U.S. have shown a great deal of temporal and geographical differentiation over the past few decades. However, the recent downturn in the U.S. economy provides a renewed motivation to explore the relationship between the macro‐economy and interstate migration. To address this issue, in this paper patterns of interstate migration are analyzed using IRS data and several migration efficiency measures for 18 2‐year time periods, 1988–2006. Included in the analysis is an examination of the relationship between system migration and economic change, structural changes in the migration system over time (national and state level), and changes in the geography of state‐level migration efficiency rates. As might be expected, the two full business cycles that occurred over this time period saw significant short‐term changes in migration flows, although the economic downturn of 2001‐02 may indicate more fundamental changes in the migration system.     

The Great Recession and the Migration Redistribution of Blacks and Whites in the U.S. South

For much of the last century, the South was a net loser of blacks and whites to other regions. The end of this “Great Migration” occurred around 1970. Since then, the South is the only U.S. region to gain both blacks and whites through migration in every decade. As recessions often perturb migration systems by restraining rates of movement and altering patterns, this paper explores how the Great Recession of 2007–2009 and its aftermath affected the established migration gains of native‐born blacks and whites within the South. We use data from the 1990 and 2000 censuses and pooled data from American Community Survey to evaluate these changes. While the South continued to add both blacks and whites from migration during the recessionary years, key states bucked this trend. Georgia, for example, experienced a net migration gain of blacks but a net loss of whites. Florida added population in all time periods studied but lost large numbers of educated blacks and whites between 2008–2010. Texas, in contrast, added both blacks and whites from migration no matter their age or education throughout the recent recession. This economic downturn, then, has disturbed long‐term migration patterns in the South. A more nuanced set of interstate movements has emerged, differentiated by age and education within race groups, which we suspect will last for some time.     

Revisiting income convergence in Turkey: Are there convergence clubs?

This paper investigates club convergence in per capita income across 81 NUTS‐III regions in Turkey over the 1987–2017 period using the procedure suggested by Phillips and Sul. Based on a nonlinear factor model that allows for transitional heterogeneity, our econometric approach enables us to test the presence of convergence clusters and to examine their transitional behavior. We obtain strong evidence that there is no absolute or conditional convergence but convergence clubs across Turkish regions: five clubs in the first period covering 1987–2001 and six clubs in the second period covering 2004–2017. The geographical distribution of clubs suggests a clear separation between the eastern and the western regions of Turkey for both periods. While geography may be destiny, results from an ordered logit model reveal that initial income per capita, human capital, and total credits are the most important determinants of convergence clubs in Turkey.     

Regional Convergence in Mexico, 1970–2005: A Panel Data Approach

This paper empirically analyzes regional disparity in terms of convergence of per capita income across Mexican states for the period 1970–2005. In particular, this study extends the conventional cross‐sectional conditional β‐convergence analysis of the existing literatures on Mexico to panel data analysis, and focuses on whether the convergence performance varies between the pre‐ and post‐economic liberalization periods. When unobservable state‐specific effects are controlled by the panel data technique, the estimated coefficients show significant conditional β‐convergence, even after economic liberalization, but with a lower speed than before economic liberalization.     

Income Distribution Characteristics of Rural Economic Sectors: Implications for Local Development Policy

Recent trends suggest increasing reliance on private markets to provide for local economic well-being. This research demonstrates the study of regional household income distribution patterns associated with productive activities important to many rural areas. A social accounting matrix analysis was used to examine agricultural production, agricultural processing, forestry production, forest products processing, and tourism in a small rural region in Wisconsin to illustrate the variable distributional characteristics of private market structures and related local economic development policy. The results showed that while high income households comprised 22 percent of total regional households in the study area, they received between 57 percent and 63 percent of earned income associated with changes in sectoral factor income. Medium income households (34 percent of regional households) received between 32 percent and 41 percent of earned income, and low income households (44 percent) received between 2 percent and 6 percent. The ability of local policy to influence distributional patterns is implied to the extent that local action can facilitate variable growth rates of targeted economic sectors.     

Short-term dynamics of the U.S. interstate migration system, 1980-1988

"This paper identifies short-term fluctuations in the [U.S.] interstate migration system using annual state-to-state migration flow data from Internal Revenue Service (IRS) records for the period, 1980 to 1988. Measures of migration efficiency are employed to indicate the net redistribution of population between states relative to the size of underlying gross interstate flows. Three findings stand out: (1) migration was more effective in redistributing the population in years of economic retrenchment than during periods of growth and expansion, (2) the dominant pattern of population redistribution shifted from a core-periphery configuration evident in the 1970s and early 1980s to a bi-coastal distribution by the mid-1980s, and (3) the most dramatic event of the 1980s was the oil glut and decline in oil prices and profits which ravaged the economies of energy states in the West South Central and Mountain regions....Overall, results demonstrate the high degree of temporal and spatial volatility in the U.S. interstate migration system."     

High‐Growth Firms in the Southern U.S.: Where is the Growth?

Policymakers across the Southern U.S. have directed considerable attention to regional economic development plans, with mixed results. Questions remain over what types of industries, firms, and/or policies can drive long‐range growth. Over the past two decades, researchers have started to focus on high‐growth firms (HGFs) due to their potential innovation spillovers and job creation prospects, both of which drive further economic development. Employing databases from the Inc. 500, this study explores the dynamics of HGFs within Southern and comparative contexts. The first goal of this paper is to explore Southern HGF activity in comparison with the U.S. at‐large. The second is to examine the geographical characteristics of HGFs within the South, which will include an exploration of locations, industrial mix, and the factors that could encourage HGF development and agglomeration. This paper will also analyze the longer‐term ownership and acquisition patterns of HGFs across the South. Are such firms remaining embedded in the South or moving elsewhere through mergers or acquisitions? The paper concludes with a discussion of the impacts of HGFs on regional economic development and moreover, whether existing policies are conducive to these firms.     

Gaming,States, and Tax Revenues—the Tortoise or the Hare: A CGE Comparative Assessment of Casino Resorts and Games‐Only Casinos

Theoretically speaking, heavy tax rates on gambling should dampen growth of the casino revenues. Indeed, a cursory glance at data across U.S. states suggests that more jobs and income are generated directly by the gaming industry when lower tax rates are applied. Using a detailed computable general equilibrium model, we evaluate the effects of a proposed machine‐based casino on New Jersey's economy as well as on the state's existing set of casino resorts in Atlantic City. We find few winners other than the state's tax coffers.     

Regional Economic Convergence in Mexico: An Analysis by Industry

ABSTRACT Existing studies of convergence across jurisdictions of a nation have focused on developed economies. A key assumption underlying regional convergence is geographical factor mobility, and in a developed economy, mobility is facilitated by low transportation costs. By the same token, convergence in a less-developed economy may be impeded by the absence of a well-developed transportation infrastructure. We examine the rate and industrial composition of economic convergence in a neighboring less-developed country (LDC), Mexico, to examine how it might have differed from the U.S. experience. We find evidence of stronger convergence in Gross State Product per capita in Mexico relative to existing estimates of U.S. convergence. Further, while manufacturing activity has been found to be a primary source of convergence in the U.S., we find weaker evidence of convergence of manufacturing activity in Mexico. On the other hand, industries such as hotels and transportation were found to be significantly influential in regional convergence in the Mexican economy.     

Foreign direct investment flows to Mexican states: A study of the automobile industry, 2004–2014

This study examines the subnational flow in foreign direct investment (FDI) to Mexican states, with a focus on the finished vehicle industry. Although prior studies have examined subnational FDI in Mexico, research on the automobile sector has been scant. Utilizing a framework associated with the theory of asset specificity, we examine the influence of human capital and labor conditions, infrastructure, subnational policies, and security. The study employs a data set on finished vehicle FDI across 31 states and the Federal district for the period of 2004–2014. We adopt a two‐part model. The first part, which includes all states and the Federal district, is estimated with pooled logistic and Firth logistic regressions. In the second part, we examine variation in levels of FDI among states selected for investment with pooled ordinary least squares with panel‐corrected and Driscoll Kraay standard errors. Labor conditions are significant for both state selection and levels of FDI, but education is influential only in the selection stage. In addition, states with trunk rail lines linked to the U.S. border are more likely to be selected and receive higher FDI. After controlling for these influences, murder and homicide rates, and state development have no significant effects.     

Ranking State Environmental Outputs: Evidence from Panel Data

This paper uses state‐level pollution data from 1986–1997 to construct two indices that rank U.S. states according to environmental outputs. A major finding is that marginal performers in other indices, such as Wyoming, garner top spots in these ranking systems. The paper also presents findings from fixed and random effects models of panel data that imply state income levels are positively associated with environmental outputs after a threshold level of income is obtained.     

The State‐Level Impacts of Enforcing Sales Taxes for E‐retail Purchases

The Marketplace Fairness Act (S. 743) recently passed by the U.S. Senate may portend a national move toward states imposing sales taxes for business‐to‐consumer e‐retail purchases. While much of the policy debate surrounding this question has focused on trade creation versus diversion, there are likely distinct compositional effects at the state level, which will affect both economic activity and tax revenue. Consumers are clearly hurt by an online sales tax. However, such a policy would seemingly benefit state tax coffers, as well as traditional brick‐and‐mortar retailers and their employees. This paper uses a computable general equilibrium model approach to get a better understanding of the state‐level income, employment, and tax revenue effects of such a policy shift, in particular the likely tradeoffs between these three traditional economic targets across reasonable ranges of price elasticities.     

Are We Moving Back to the City? Examining Residential Mobility in the Washington,DC Metropolitan Area

This research assesses the extent to which there is evidence of population re‐centralization or back to the city moves by tracking the historical trend of household and income mobility in the Washington, DC metropolitan area. County‐to‐county migration data and four migration efficiency measures are used to investigate net flows of households and income in the region. The results show a nascent tendency of back to the city movement; however, the redistribution of households and income in the metropolitan area is more complex. While the region's core may be starting to gain households and income, there are still significant flows into the region's most distant suburbs. The results of this research have implications for transportation, housing, and economic development policy making in Washington, DC and other regions. The study also offers a unique example of how to study household and income redistribution within U.S. metropolitan areas.