Income Inequality: A State-by-State Complex Network Analysis
Physica A: Statistical Mechanics and its Applications, September 2017
27 Pages Posted: 28 Jun 2015 Last revised: 26 Nov 2017
Date Written: June 26, 2015
This study performs a long-run, inter-temporal analysis of income inequality in the U.S. for the period 1916-2012. We use a) descriptive analysis to examine the evolution of inequality through time and b) complex network tools, more specifically an optimization technique called the Threshold-Minimum Dominating Set, which provides new insight on the pattern income inequality across the U.S. states. Several empirical findings emerge. First, inequality displays a heterogeneous evolution across the four focal sub-periods. Second, the results differ between the inequality measures examined, namely the Top 1% share of income and the Gini coefficient. Finally, groups of similarly behaving states (in terms of inequality) are identified that the U.S. authorities can use to investigate the causes of inequality within the U.S. and implement the appropriate policy interventions.
Keywords: Income inequality, graph theory, US states
JEL Classification: D63
Suggested Citation: Suggested Citation