An Analysis of Regional Income Variation among the Five Regions of Oklahoma

Abstract

This paper investigates recent trends of per capita personal income in the state of Oklahoma to ascertain what if any long-run trends are exhibited. Standard theoretical analysis suggests that per capita incomes are expected to converge, especially across regions. However, recent research indicates that the national trend is one of the regional income divergences. The question posed by this paper is whether or not the per capita income in Oklahoma supports evidence of divergence. The data for 1969 to 2012 obtained from Department of Commerce, Bureau of Economic Analysis (BEA) are analyzed. These data are used to regionalize the state into five distinct county-based areas. Results suggest that Oklahoma exhibits a transitional pattern from convergence to divergence during the period of study. The three objectives of this study are: 1) a test of the growth pole cycle theory; 2) an extension of previous analysis of Oklahoma regional income variation; and 3) a preliminary test of the impact of the 2008 recession on regional income variation. After identification and analysis of the five substate regions, an overview of the growth pole cycle theory explaining the hypothesized pattern is provided, followed by an exposition of the analytical methodology. The analytical results are twofold, first, a baseline analysis regressing variation on per capita income and second, the inclusion of the unemployment rate.