A.4.2. Initial Wage Levels versus Growth Rates

Six states were selected so that both urbanized and rural states are represented: California, Texas and New York vs. Kansas, Iowa and Nebraska.

Figure A4.1. Income Composition in California, Texas and New York

In all six states, the top percentile clearly distinguishes itself from the bottom two fractiles. In the top 1 percent, wages represent a lesser share of total income than in the other two layers of the distribution, and capital gains a more substantial share. While capital gains fluctuations seem to be in tune with those of total income, wages do not necessarily vary in the same direction as total income does.

Even though there are differences in levels between the ‘rural’ states and the ‘richer ones’, wages appear to be more stable than total income, and much more stable than capital gains in all of them.

Figure A4.2. Income Composition in Kansas, Iowa and Nebraska

In a nutshell, wages seem to reach higher levels in states displaying high inequality, and follow more or less closely the fluctuations of capital gains in poorer states than in richer ones.