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Economic freedom and employment growth in U.S. states

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  • Thomas A. Garrett
  • Russell M. Rhine

Abstract

The authors extend earlier models of economic growth and development by exploring the effect of economic freedom on U.S. state employment growth. They find that states with greater economic freedom?defined as the protection of private property and private markets operating with minimal government interference?experienced greater rates of employment growth. In addition, they find that less-restrictive state and national government labor market policies have the greatest impact on employment growth in U.S. states. Beyond labor market policies, state employment growth is influenced by state and local government policies, but not the policies of all levels of government, including the national government. Their results suggest that policymakers concerned with employment should seriously consider the degree to which their own labor market policies and those of the national government may be limiting economic growth and development in their respective states.

Suggested Citation

  • Thomas A. Garrett & Russell M. Rhine, 2011. "Economic freedom and employment growth in U.S. states," Review, Federal Reserve Bank of St. Louis, vol. 93(Jan), pages 1-18.
    • Handle: RePEc:fip:fedlrv:y:2011:i:jan:p:1-18:n:v.93no.1
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    Cited by:

    1. Bjørnskov, Christian, 2015. "Does economic freedom really kill? On the association between ‘Neoliberal’ policies and homicide rates," European Journal of Political Economy, Elsevier, vol. 37(C), pages 207-219.
    2. Bologna, Jamie & Young, Andrew T. & Lacombe, Donald J., 2016. "A spatial analysis of incomes and institutional quality: evidence from US metropolitan areas," Journal of Institutional Economics, Cambridge University Press, vol. 12(1), pages 191-216, March.
    3. R. Hafer & Garett Jones, 2015. "Are entrepreneurship and cognitive skills related? Some international evidence," Small Business Economics, Springer, vol. 44(2), pages 283-298, February.
    4. Anderson, John E., 2012. "State Tax Rankings: What Do They and Don’t They Tell Us?," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(4), pages 985-1010, December.
    5. Noel D., Johnson & William, Ruger & Jason, Sorens & Steven, Yamarik, 2012. "Corruption as a response to regulation," MPRA Paper 36873, University Library of Munich, Germany.
    6. John Dove & Daniel Sutter, 2018. "Is There a Tradeoff Between Economic Development Incentives and Economic Freedom? Evidence from the US States," The Review of Regional Studies, Southern Regional Science Association, vol. 48(1), pages 55-69, Spring.
    7. Lucas, David & Boudreaux, Christopher, 2018. "Federal Regulation, Job Creation, and the Moderating Effect of State Economic Freedom," MPRA Paper 92593, University Library of Munich, Germany.
    8. Joshua C. Hall & Brad R. Humphreys & Jane E. Ruseski, 2015. "Economic Freedom, Race, and Health Disparities: Evidence from US States," Working Papers 15-43, Department of Economics, West Virginia University.
    9. Jed Kolko & David Neumark & Marisol Cuellar Mejia, 2013. "What Do Business Climate Indexes Teach Us About State Policy And Economic Growth?," Journal of Regional Science, Wiley Blackwell, vol. 53(2), pages 220-255, May.
    10. David S. Lucas & Christopher J. Boudreaux, 2019. "The Interdependence of Hierarchical Institutions: Federal Regulation, Job Creation, and the Moderating Effect of State Economic Freedom," Papers 1903.02924, arXiv.org.
    11. Compton, Ryan A. & Giedeman, Daniel C. & Hoover, Gary A., 2014. "A distributional analysis of the benefits of economic freedom," European Journal of Political Economy, Elsevier, vol. 33(C), pages 121-133.
    12. Falguni Pattanaik & Narayan Chandra Nayak, 2013. "Economic Freedom and Employment in India," South Asian Journal of Macroeconomics and Public Finance, , vol. 2(1), pages 59-79, June.
    13. Vijaya Sunder M & Anupama Prashar, 2023. "State and citizen responsiveness in fighting a pandemic crisis: A systems thinking perspective," Systems Research and Behavioral Science, Wiley Blackwell, vol. 40(1), pages 170-193, January.
    14. Yankow, Jeffrey J., 2014. "A Longitudinal Analysis of the Impact of State Economic Freedom on Individual Wages," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 44(1).
    15. Zachary Horváth & Brian David Moore & Jonathan C. Rork, 2014. "Does Federal Aid to States Aid the States?," Growth and Change, Wiley Blackwell, vol. 45(2), pages 333-361, June.
    16. Keith Barnatchez & Robert Lester, 2017. "The Relationship Between Economic Freedom And Economic Dynamism," Contemporary Economic Policy, Western Economic Association International, vol. 35(2), pages 358-372, April.
    17. Lauren R. Heller & E. Frank Stephenson, 2014. "Economic Freedom And Labor Market Conditions: Evidence From The States," Contemporary Economic Policy, Western Economic Association International, vol. 32(1), pages 56-66, January.
    18. Daniel L. Bennet, 2016. "Subnational Economic Freedom and Performance in the United States and Canada," Cato Journal, Cato Journal, Cato Institute, vol. 36(1), pages 165-185, Winter.
    19. R. Warren Anderson, 2018. "The Detroit Discontinuity," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 35(3), pages 167-184, September.
    20. Daniel L. Bennett, 2021. "Local economic freedom and creative destruction in America," Small Business Economics, Springer, vol. 56(1), pages 333-353, January.
    21. Allen N. Berger & Raluca Roman, 2015. "Did saving Wall Street really save Main Street : the real effects of TARP on local economic conditions," Research Working Paper RWP 15-13, Federal Reserve Bank of Kansas City.
    22. Farhadi, Minoo & Islam, Md. Rabiul & Moslehi, Solmaz, 2015. "Economic Freedom and Productivity Growth in Resource-rich Economies," World Development, Elsevier, vol. 72(C), pages 109-126.

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