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KNOWLEDGE MATTERS: THE LONG-RUN DETERMINANTS OF STATE INCOME GROWTH

Authors


  • For helpful comments and suggestions, the authors thank seminar participants at the Case Western Reserve University and the Federal Reserve Bank of Cleveland. Particularly useful suggestions were offered by Mark Sniderman, Chris Taber, and Lance Lochner. The paper also has benefited greatly from the comments of anonymous referees. Data collection were greatly aided by persistent research assistants: Bethany Tinlin, Brian Rudick, and Christian Miller.

Abstract

ABSTRACT State per capita income differences narrowed considerably between 1939 and 1976. However, this convergence has been incomplete. We examined the sources of relative per capita income growth using an augmented growth model and a panel of the 48 contiguous states from 1939 to 2004. We explored the effect of tax burdens, public infrastructure, size of private financial markets, rates of business failure, industry structure, climate, educational attainment, and technology production. Our results show that a state's technology and its college attainment rates are the main factors that allow some state's per capita income to remain above those of other states.

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