The turning point of regional deindustrialization in the U.S.: Evidence from panel and time-series data

Abstract

The phenomenon of deindustrialization may emerge in both developed and developing countries. Besides deindustrialization is observable in different regions of a country. This study analyzes inter-state deindustrialization trends in the United States (the U.S.) from 1977 to 2017 by dividing states into three income level groups (high, middle, and low). Instead of specifying the factors, we determine the turning points of inter-state deindustrialization and the difference in the rate of deindustrialization by applying both time-series and panel data methodology. The results suggest that the deindustrialization hypothesis is valid in 38 out of 50 states, DC, and the U.S. at the country level. Furthermore, our results show that deindustrialization curves in lower-income states reach a turning point at lower per capita income levels and at an earlier time-span compared to higher-income state groups. Our findings indicate that premature/early deindustrialization, which is commonly stated for developing countries in the literature is also valid for different regions in a developed country, the U.S. in our case.