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Asked Sep 24, 2019
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The horizontal axis of the figure below shows log of real personal income per person in 1880 for 47 U.S. states. The vertical axis shows the average annual growth rate of real personal income per capita for each state from 1880 to 2000. The two-letter abbreviation identifies the state. The solid line is the straight line that provides the best fit to the relation between the growth rate of income per person and the level of income per person in 1880. Based on this figure, discuss whether the U.S. states do or do not exhibit convergence. Explain.

233
CONVERGENCE
0.025
GA
TX
ARL
0.02
MD
DE
L
UT
LA
NJ CT
0.015
MA
NY
PAWA
AB
CA
0.01
WY
AZ
0.005
-0.6
-0.2
0.2
O.6
1
1.4
1.8
LOG(1880 PER CAPITA PERSONAL INCOME)
FIG. 1-Growth rate from 1880 to 1988 vs. 1880 per capita income
Barrow and Sala-i-Martin (1992), Convergence
PER CAPITA GROWTH RATE, 1880-1988
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233 CONVERGENCE 0.025 GA TX ARL 0.02 MD DE L UT LA NJ CT 0.015 MA NY PAWA AB CA 0.01 WY AZ 0.005 -0.6 -0.2 0.2 O.6 1 1.4 1.8 LOG(1880 PER CAPITA PERSONAL INCOME) FIG. 1-Growth rate from 1880 to 1988 vs. 1880 per capita income Barrow and Sala-i-Martin (1992), Convergence PER CAPITA GROWTH RATE, 1880-1988

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Figure contains the log of real person income in 1880  for 47 us states

Y - axis shows per capita Growth rate, 1800-1988

X - axis shows lo...

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