The Distribution of State Incomes: Differential Growth of Sectoral Employment.

The article focuses on the distribution of state incomes and the differential growth of sectoral employment. The degree of income concentration varies significantly among countries and among states of the U.S. It is commonly accepted by economists that the concentration of income is less unequal in high income economies. The relation between low income concentration and high aggregate income is ascribed to such factors as the distribution of property income, the education of low income workers, and the relative size of the nonagricultural sector. An implication of the hypothesized relation between income concentration and the relative size of nonagricultural employment is that intersectoral labor movements decrease income concentration. So far, this implication has not been tested. In this paper, the relation between changes in income concentration and changes in sectoral employment within states of the U.S. is tested directly. The findings in this paper confirm the hypothesis that changes in income concentration are related to differential growth rates of sectoral employment within states.