Income Inequality : A State-by-State Complex Network Analysis

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