Previous literature relative to income inequality has made available a number of demographic, economic, and policy determinants. This paper, using growth transmission literature as a basis for analysis, develops an argument showing that these results are biased and unreliable due to an omitted variable bias and a model misspecification. The model developed in this paper corrects for the bias by including a missing spatial factor that accounts for a contagion effect experienced by neighboring states. Income inequality is shown to be transmissible through multiple channels and may therefore be combatted only through a concerted group effort, rather than through individual state policy efforts.
Dellinger, Jared, "Catching a Cold: A Look at the Expected Contagion Effect of Neighboring Income Inequality" (2011). Master's Theses - Economics. 5.