CONVERGENCE AND THE U.S. STATES: A TIME-SERIES ANALYSIS*

ABSTRACT. After decades of apparent convergence, state and regional per capita earnings diverged between 1978 and 1988. A central tenet of the convergence hypothesis is that shocks to relative state and regional earnings, such as those of the 1978 to 1988 period, are transitory. We find evidence for convergence for the U.S. states and regions during the 1929 to 1990 period after allowing for a break in the rate at which the various states and regions were converging in 1946. An important finding of this research is that the US. states and regions achieved per capita earnings convergence by 1946.