A Long-Run Perspective on Unconditional Convergence in Manufacturing: Evidence from U.S. Industrialization

This paper examines long-run unconditional convergence of labour productivity in manufacturing across 48 contiguous U.S. states. We construct a detailed panel data set of state-industry pairs with over 120 industries covering the period 1880-2007. The remarkable finding is a rapid rate of unconditional β-convergence: 7.6% per year in the period 1880-2007, and about 6.5% in each period 1880-1940 and 1958-2007. We also find a steep rise in unconditional convergence from 5.5% in 1930-1940 to 10.6% in 1940-1947 and 9.4% in 1947-1958, followed by a considerable drop thereafter. In the years 1958-2007, the rate of convergence in ICT industries (8.3%) is higher than in 1st-Industrial-Revolution (6.3%) or 2nd-Industrial-Revolution (7.0%) industries. We interpret our results as a process of technological catch up between initially laggard Southern manufacturing and manufacturing industries in the North.<p></p>