Why don't state incomes converge? Effective worker pay does not differ among states

Differing education levels affect mean income differences among states. But mean earnings also differ holding constant the amounts of education and experience; persons in higher income states earn more. The causes could operate either during the process of growing up, or currently. To distinguish between these two possibilities, the paper compares natives' and immigrants' earnings. Immigrants show a smaller state income effect than do natives, or no effect. This suggests that the differences among states are mainly due to influences during development (when immigrants were not present) rather than during adulthood. That is, the observed state differentials represent not different pay for the same work but (in addition to differences in occupational composition) different pay for different qualities of work, and most likely stem from differences in the quality of schooling.