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. spanning the period 1916-2012. We employ both descriptive analysis and the ThresholdMinimum Dominating Set methodology from Graph Theory, to examine the evolution of inequality through time. In doing so, we use two alternative measures of inequality: the Top 1% share of income and the Gini coefficient. This provides new insight on the literature of income inequality across the U.S. states. Several empirical findings emerge. First, a heterogeneous evolution of inequality exists across the four focal sub-periods. Second, the results differ between the inequality measures examined. Finally, we identify groups of similarly behaving states in terms of inequality. The U.S. authorities can use these findings to identify inequality trends and innovations and/or examples to investigate the causes of inequality within the U.S. to implement appropriate policies.