Appendix 4 : GROWTH RATES AND WAGES

This section briefly exposes how inter-state inequality co-varied with top wages in the recent years. The idea is to see whether the regional convergence that sometimes occurs with income also occurs with salaries and wages.

A.4.1. Composition of Income in IRS Tables

The IRS tables also provide information on income composition at the state level. The IRS adjusted gross income (AGI) includes the following items: salaries and wages, interests (taxable and non-taxable), dividends, entrepreneurial income (i.e. business and farm incomes), pensions and annuities, and realized capital gains. Using the data from 1997 to 2001, the average incomes (in 2003 dollars) accruing to AI90-95, AI95-99, and to the top percentile, AI99-100, were broken down into each income source.