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ROM THE EARLY 1930s through the late 1970s, per capita incomes rose faster in lowincome than high-income states, resulting in a substantial reduction in the inequality of state per capita income. This trend, however, has been rever-sed in the last decade (figuie 11.1 Per capita income inequality has risen gradually since 1978 and, by 1987, had m’eturned to the levels prevailing in the mid-1960s.’

Have Federal Spending and Taxation Contributed to the Divergence of State Per Capita Incomes in the 1980s?