"Economic Integration and Convergence: A Look at the U.S. States"

Lane Kenworthy

Social Science Quarterly, vol. 80, no. 4, 1999, pp. 858-69

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Abstract

Convergence among national economies in economic policy choices, structural features, and performance patterns is viewed by some observers as an inevitable result of increasing integration of product and financial markets. Yet several recent studies suggest that relatively little convergence has occurred thus far among the affluent industrialized countries. Is that because the extent of global economic integration is still limited? Or is it because integration does not lead to convergence? This study attempts to sort out the relative importance of these two factors. I examine convergence among the 50 American states on a variety of indicators since 1970, focusing on changes (or lack thereof) in the coefficient of variation for these indicators over time. I also compare the current degree of homogeneity among the states to that among the 24 OECD nations. Despite having been relatively integrated for a considerable period of time, the U.S. states have exhibited little convergence over the past several decades. And on most measures for which comparison is possible, the states are only slightly more economically homogenous, or less so, than are the OECD countries. These findings suggest that the convergence-generating effects of economic integration are limited. I argue that this is because market competition permits considerable space for variation and because institutions mediate the impact of market forces.
 

Data set

There are two data sets, both in Microsoft Excel 97.

The first contains data for the 50 U.S. states. Click here to access these data. For variable definitions and data sources, see Table 1 of the article. The variables are:

STATE      State name
STATE#
TAX70      Tax revenue (% of GSP), 1970
TAX80      Tax revenue (% of GSP), 1980
TAX90      Tax revenue (% of GSP), 1990
TAX96      Tax revenue (% of GSP), 1996
AFDC70     Maximum monthly AFDC benefit for a family of 3 (in 1991$), 1970
AFDC80     Maximum monthly AFDC benefit for a family of 3 (in 1991$), 1980
AFDC91     Maximum monthly AFDC benefit for a family of 3 (in 1991$), 1991
TRANS70    Government transfers (% of GSP), 1970
TRANS80    Government transfers (% of GSP), 1980
TRANS90    Government transfers (% of GSP), 1990
TRANS96    Government transfers (% of GSP), 1996
RTW70      1 = right-to-work law, 0 = otherwise, 1970
RTW80      1 = right-to-work law, 0 = otherwise, 1980
RTW90      1 = right-to-work law, 0 = otherwise, 1990
EDP70      Number of state economic development programs, 1970
EDP80      Number of state economic development programs, 1980
EDP90      Number of state economic development programs, 1990
MANUF70    Manufacturing employment (% of nonfarm employment), 1970
MANUF80    Manufacturing employment (% of nonfarm employment), 1980
MANUF90    Manufacturing employment (% of nonfarm employment), 1990
MANUF95    Manufacturing employment (% of nonfarm employment), 1995
UNION75    Union membership (% of wage and salary workers), 1975
UNION83    Union membership (% of wage and salary workers), 1983
UNION90    Union membership (% of wage and salary workers), 1990
UNION96    Union membership (% of wage and salary workers), 1996
PERSIN69   Per capita personal income (1996$), 1969
PERSIN79   Per capita personal income (1996$), 1979
PERSIN89   Per capita personal income (1996$), 1989
PERSIN96   Per capita personal income (1996$), 1996
FAM4IN74   Median income for 4-person families (1996$), 1974
FAM4IN79   Median income for 4-person families (1996$), 1979
FAM4IN89   Median income for 4-person families (1996$), 1989
FAM4IN96   Median income for 4-person families (1996$), 1996
GSPPC73    Per capita GSP (1996$), 1973
GSPPC79    Per capita GSP (1996$), 1979
GSPPC89    Per capita GSP (1996$), 1989
GSPPC96    Per capita GSP (1996$), 1996
POV69      Poverty rate (%), 1969
POV79      Poverty rate (%), 1979
POV89      Poverty rate (%), 1989
POV96      Poverty rate (%), 1996
UNEM73     Unemployment rate (%), 1973
UNEM79     Unemployment rate (%), 1979
UNEM89     Unemployment rate (%), 1989
UNEM96     Unemployment rate (%), 1996

The second data set contains data for the 24 OECD nations. Click here to access these data. For variable definitions and data sources, see Table 2 of the article. The variables are:

COUNTRY    Country name
COUNTRY#
INV94      Investment (gross fixed capital formation as % of GDP), 1994
SAV94      Saving (gross saving as % of GDP), 1994
TAXRV95    Tax revenue (current receipts of government as % of GDP), 1995
TRANS91    Government transfers (% of GDP), 1991
MANUF95    Manufacturing employment (% of civilian employment), 1995
UNION95    Union membership (% of wage and salary workers), 1995
GDPPC96    Per capita GDP (1996 US$, using purchasing power parities), 1996
UNEM96     Unemployment rate (%), 1996