Only income diverges: A neoclassical anomaly

The neoclassical growth model (NGM) is only consistent with the absolute divergence in output levels we observe if some determinants of steady state income are also diverging. In this paper we show that accumulation rates of physical and human capital are actually significantly converging, as are openness to trade and several variables measuring institutional quality. Output divergence in the face of input, policy and institutional convergence is a deep anomaly for the NGM.