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What Do Business Climate Indexes Teach Us About State Policy And Economic Growth?

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  • Jed Kolko
  • David Neumark
  • Marisol Cuellar Mejia

Abstract

State business climate indexes capture state policies that might affect economic growth. State rankings in these indexes vary wildly, raising questions about what the indexes measure and which policies are important for growth. Indexes focused on productivity do not predict economic growth, while indexes emphasizing taxes and costs predict growth of employment, wages, and output. Analysis of sub-indexes of the tax-and-cost-related indexes point to two policy factors associated with faster growth: less spending on welfare and transfer payments; and more uniform and simpler corporate tax structures. But factors beyond the control of policy have a stronger relationship with economic growth.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 53 (2013)
Issue (Month): 2 (05)
Pages: 220-255

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Handle: RePEc:bla:jregsc:v:53:y:2013:i:2:p:220-255

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Economically Free States see 30 Percent Faster Job Growth
    by Matt Mitchell in Neighborhood Effects on 2011-05-12 18:26:11
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Cited by:
  1. Anderson, John E., 2012. "State Tax Rankings: What Do They And Don’T They Tell Us?," National Tax Journal, National Tax Association, vol. 65(4), pages 985-1010, December.
  2. Marcus Hagedorn & Fatih Karahan & Iourii Manovskii & Kurt Mitman, 2013. "Unemployment benefits and unemployment in the Great Recession: the role of macro effects," Staff Reports 646, Federal Reserve Bank of New York.
  3. David Neumark & Helen Simpson, 2014. "Place-Based Policies," NBER Working Papers 20049, National Bureau of Economic Research, Inc.
  4. David Neumark & Jennifer Muz, 2014. "The “Business Climate” and Economic Inequality," NBER Working Papers 20260, National Bureau of Economic Research, Inc.

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