Comparing EU member states and US states

Economists often compare the European Union and the United States, notably in the context of macro-economic management. For instance, the United States has a fiscal union that allows automatic transfers from richer states to poorer states, a system that the European Union does not have. The United States also has a more integrated labour market, and people move more easily between states, for instance from high-unemployment to low unemployment states. In the graphs below, I have pooled together data on GDP per capita and GDP growth rate in the European Union and the United States. The differences are quite striking: US states are much more similar both in terms of GDP per capita and growth rates than European Union member states. This means that growth is more correlated across US states than across EU member states. Both have their outliers: Washington DC in the US and Luxembourg in the European Union. Greece stands out as a (negative) outlier in terms of GDP growth in the EU, while Texas and North Dakota have had much higher growth rates than the rest of the country.

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