Inter-State Dynamics of Invention Activities, 1930–2000∗ Catherine Y. Co Economics, University of Nebraska at Omaha
[email protected] John S. Landon-Lane Economics, Rutgers University
[email protected] Myeong-Su Yun Economics, Tulane University
[email protected] April 3, 2005 ∗Corresponding author: John Landon-Lane, Department of Economics, Rutgers University, 75 Hamil- ton Street, New Brunswick, NJ 08901, USA. Email:
[email protected] Telephone: (732) 932-7691 Fax: (732) 932-7416. We thank an anonymous referee whose comments and suggestions have helped to improve the paper. Inter-State Dynamics of Invention Activities, 1930–2000 Abstract We study the dynamics of the cross-section distribution of patents per capita for the 48 continental U.S. states from 1930 to 2000 using a discrete-state Markov chain. We test for and find evidence in favor of the (knowledge) convergence hypothesis as we find that the distribution of patents is converging to a limiting distribution that is significantly more concentrated than its initial distribution. States in the extreme are more mobile and are more likely to move to the middle than states in the middle of the cross-sectional distribution and the rate of convergence to the limiting distribution is “slow.” Keywords: Patent, U.S. States, Convergence JEL Classification: O31; O18; C32 1 Introduction and Background Knowledge is assumed to flow instantly between economies in neoclassical growth theory. If technology gaps exist initially, they will close very quickly. That is, if convergence tests on knowledge rates (e.g., patenting rates) are conducted, unequivocal evidence in favor of knowledge convergence would be found (See Cani¨els (2000) for a review).