ARE US REGIONAL INCOMES CONVERGING - A TIME-SERIES ANALYSIS

The time series properties of per-capita income in U.S. regions are te sted for consistency with the neoclassical growth model's prediction o f per-capita income convergence. Two conditions are required for conve rgence. Shocks to relative regional per-capita incomes should be tempo rary (stochastic convergence), and initially poor regions should catch up to rich regions (beta-convergence). We find evidence for stochasti c convergence across U.S. regions during the 1929-90 period after allo wing for a trend break in 1946. We also find that U.S. regions have ac hieved beta-convergence. These findings support the neoclassical model 's prediction of conditional convergence.