“It’s staggering, really, like night and day,” said Lawrence R. Jacobs, a political scientist at the University of Minnesota. “You’ve got two states with the same history, the same culture, the same people — it’s kind of like they’re cousins. And now they’re looking across the border and seeing one world, then seeing something else entirely on the other side.”
Figure 1: Log per capita Gross State Product in Wisconsin (blue), and in Minnesota (red), in Ch.2005$, rescaled to 2011=0. Vertical dashed line at 2011. Data for 2013 is based on Philadelphia Fed coincident indicators, first 11 months. Pre-1997 data in Ch.1997$ is spliced to post-1997 data. Source: BEA, FRED, Philadelphia Fed, Census, and author’s calculations.
Real per capita income in Wisconsin has lagged Minnesota a cumulative 2.2% (log terms) since 2011. Clearly, other factors affect growth rates besides government policies. However, the two states are roughly comparable in size — MN was 10% larger than WI in 2011. WI export exposure is 8.7% vs. 7.4% for MN that year. In fact for the two years ending 2012,
Minnesota’s Wisconsin’s real exports grew an average of 3.9% vs. Minnesota’s 1.0% — so Wisconsin had a leg up. And yet Wisconsin growth since 2011 has lagged.
More on the Minnesota-Wisconsin comparison here.
h/t dilbert dogbert for alerting me to the article.