Employee Income and Earnings Disparities in the United States of America: A Cluster Analysis and Causal Relationships

Abstract

[EN] The analysis of the economic development in terms of the compensation of employees and earnings in the United States of America provides profound insights into the interdependency structure between different states. This paper uses hierarchical clustering to group the 50 US states, based on 47 different time series of employee wages and sector earnings. This was followed by a causal inference analysis to reveal internal interactions between clusters of states to determine whether there are groups of states that influence others. Additionally, it was determined whether the clusters exhibit statistically significant differences in terms of GDP growth. The results obtained from this analysis strongly suggest the existence of statistically significant differences in terms of GDP growth, and furthermore, indicate that the economically stronger clusters exert a unidirectional causal influence on the weaker clusters. This study provides policymakers with important information that can inform decisions regarding the importance of wage distribution as a vector of regional differences and economic activity.