Regional Growth and Migration: A Japan-U.S. Comparison

Do poor economies grow faster than rich ones? This important economic question (which we call [beta]-convergence) is analyzed in this paper using two regional data sets: 47 Prefectures in Japan and 48 States of the U.S.. We find clear evidence of convergence in both countries: poor prefectures and states grow faster. We also find that there is intraregional as well as interregional convergence. We analyze the cross sectional standard deviation across prefectures and states. We find that in both countries there has been a long term decline (a phenomenon that we call [sigma]-convergence). Finally we study the determinants of the rates of regional in-migration and, again. find striking similarities. In both countries, the reaction of net in-migration rates to the log of initial income is slightly above .025, which indicates a slow (although very significant) speed of population adjustment to income differentials. We find little evidence in favor of the argument that population movements are the reason why we find convergence across economies.