Despite evidence that the bulk of all job creation is attributed to a small subset of establishments, their performance has not been included in spatially explicit models of regional income convergence. Because convergence is an inherently geographic process and standard ordinary least squares (OLS) tests frequently violate basic statistical assumptions, a nonspatial model of income convergence is compared to a spatially explicit model incorporating both traditional location factors and the influence of sustained growth firms in the United States over the period from 1990 to 2010. Our primary findings indicate that the pace of convergence is both spatially contingent and likely slower than OLS estimates suggest. Further, sustained growth firms add significant explanatory power to the conditional model, lending credence to the proposition that establishment-level performance impacts the convergence process.
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