Regional club convergence: Evidence from U.S. metropolitan-level data

Abstract

ABSTRACT In this paper, we analyze income per capita absolute and club convergence of 383 metropolitan areas of the U.S. To our knowledge, we are the first to provide club convergence analysis of income per capita at the metropolitan area-level. Using data for 1969–2017 containing 18,767 observations, we employ a data-driven convergence model that also allows heterogeneity in the panel. We demonstrate evidence of the absence of absolute convergence and the presence of club convergence. Furthermore, we use the ordered logit model to analyze the economic, demographic, and several other factors influencing club membership. Our results reveal a diversity of growth experiences across the U.S. metropolitan areas by extensively accounting for heterogeneity using a novel transition dynamic modeling framework.