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Ann Reg Sci (1994) 28:177-196 --The Annals of--- Regi0nal Science © Springer-Verlag 1994 The spatial and temporal dynamics of US regional income inequality, 1950-1989 C. Cindy Fan ~ and Emilio Casetti 2 ~Departmen~ of Geography, University of California-Los Angeles, 405 Hilgard Avenue, Los Angeles, CA 90024, USA, Fax: (310)206-5976 2Department of Geography, Ohio State University, I90 N. Oval Mall, Columbus, OH 43210, USA Received January 1993 / Accepted in revised form March 1994 Abstract. The inverted-U hypothesis which so influenced research on regional in- come inequality is obsolete and does not predict or explain the recent rise in re- gional inequality. We argue that the regional dynamics literature on polarization, polarization reversal and spatial restructuring offers more powerful explanations to changes in regional income inequality. In addition to the conventional ap- proach of measuring systemic inequality, the empirical analysis in this paper em- phasizes inequality variations, which put into focus the interplay between regional dynamics and regional income inequality. The findings highlight the impact of sectoral shifts and global spatial restructuring on the US regional economy, where new cores of growth and renewed growth are emerging. Introduction Kuznets' seminal work in 1955 introduced the inverted-U hypothesis which states that income inequality between individuals tends to first increase and then decline as a nation progresses during the course of economic development. The hypothe- sis has since been extended to explain changes in regional income inequality. Based on international cross-sectional data and national time-series data, Williamson (1965) showed that regional inequality within nations also follows the path of an inverted-U, increasing in early stages of economic development and decreasing in later stages. The initial increase in regional inequality is explained by concentration of income and income-generating factors in selected regions of a nation; and the subsequent decrease in regional inequality is explained by diffu- sion of income and income-generating factors. The increase and decrease in re- gionai inequality are also referred to as regional divergence and regional con- vergence respectively, and their occurrences have been verified by empirical studies of many developed countries (Easterlin 1958; Perin and Semple 1976; Robinson 1976; Smolensky 1961; Williamson 1965). Explanations for the inverted-U in regional income inequality have been strongly influenced by neoclassical logic, which emphasizes the tendency toward 178 c.C. Fan and E. Casetti equilibrium as the factor market adjustment mechanism evens out regional dif- ferentials in income (Alonso 1980; Easterlin 1958). Using the US as an illustra- tion, Williamson (1965) argued that the initial directions of labor and capital migration favored the more developed North; later as the nation's interregionat linkages improved, labor and capital migration became less selective and would slow down or reverse to benefit the South. Recent evidence however suggests that changes in income inequality and changes in regional income inequality continue after the last stages of the in- verted-U model. In the US once again personal income inequality has increased (Danziger and Gottschalk 1993). Interestingly, regional income inequality in the US has also increased during the late 1970s and the ...

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