Convergence in U.S. Metropolitan Statistical Areas

In this paper, the convergence of income per capita across U.S. metropolitan statistical areas (metros) are examined over the period between 1969 and 2011. We initiate the analysis with multivariate tests for stability, and the existence of unit roots. The analysis is complemented by the use of the panel stationarity test accounting for structural changes, as proposed by Carrion-i-Silvestre et al. (2005). The study of convergence is important for both economists, as a means to test growth theories and distinguish between different models, as well as policy makers who seek to maximize the utility of their constituents by making use of all information available to them. We find that that in the 384 U.S. metros there is a divergence of per capita income, which is dissimilar to other empirical literature that has dealt with convergence using older time periods and data.