a. Does convergence property imply that a measure of dispersion of income per pe

Question

a. Does convergence property imply that a measure of dispersion of income per person across the economies will narrow over time?

b. Abosolute convergence held for US staes from 1880 to 2000. A measure of the dispersion of per capita income across the states declined for most of the period from 1880 to 1970. Dispersion did not change a great deal from 1970 to 2000. Can you relate these observation to your answer from question a?

C. we cound that absolute convergence did not hold for a broad group of countries from 1960 to 2000. We did find that conditional convergence held for these countries. A measure of the dispersion of per capita real GDP across these countries shows a mild but persistent increase from 1960 to 2000. how would you account for this pattern?

Explanation / Answer

(a)

In economics, convergence hypothesis states that poorer countries will tend to grow at a faster pace as compared to richer countries. As a result, all the economies will eventually converge in terms of per capita income.

Thus, yes, the convergence property implies that a measure of dispersion of income per person across the economies will narrow over time.

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