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A spatial analysis of incomes and institutional quality: evidence from US metropolitan areas

Author

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  • BOLOGNA, JAMIE
  • YOUNG, ANDREW T.
  • LACOMBE, DONALD J.

Abstract

We use the Stansel (2013) metropolitan area economic freedom index and 25 conditioning variables to analyze the spatial relationships between institutional quality and economic outcomes across 381 U.S. metropolitan areas. Specifically, we allow for spatial dependence in both the dependent and independent variables and estimate how economic freedom impacts both per capita income growth and per capita income levels. We find that economic freedom and per capita income growth and income levels are directly and positively related. Furthermore, we find that the total (direct plus indirect) effects on all metropolitan areas are positive and larger in magnitude than the direct effects alone, indicating that freedom-enhancing reforms in one metropolitan area lead to positive-sum games with neighboring metropolitan areas.

Suggested Citation

  • 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.
    • Handle: RePEc:cup:jinsec:v:12:y:2016:i:01:p:191-216_00
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    Cited by:

    1. Jamie Bologna & Joshua C. Hall, 2014. "Economic Freedom Research: Some Comments and Suggestions," Working Papers 14-23, Department of Economics, West Virginia University.
    2. Justin T. Callais & Jamie Bologna Pavlik, 2023. "Does economic freedom lighten the blow? Evidence from the great recession in the United States," Economics of Governance, Springer, vol. 24(3), pages 357-398, September.
    3. The Nguyen Huynh, 2022. "Spatial effects of institutional quality on firm performance: evidence from Vietnam," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 89-105, November.
    4. Justin Callais & Kelly Hyde & Ilia Murtazashvili & Yang Zhou, 2024. "How does economic freedom influence public health? Evidence from U.S. cities," Southern Economic Journal, John Wiley & Sons, vol. 90(3), pages 656-681, January.
    5. Jesús Peiró‐Palomino & Andrés J. Picazo‐Tadeo & Vicente Rios, 2020. "Well‐being in European regions: Does government quality matter?," Papers in Regional Science, Wiley Blackwell, vol. 99(3), pages 555-582, June.
    6. Jesús Peiró-Palomino, 2019. "Government quality and regional growth in the enlarged European Union: Components, evolution and spatial spillovers," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 45, pages 17-37.
    7. Jamie Bologna, 2017. "Contagious corruption, informal employment, and income: evidence from Brazilian municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(1), pages 67-118, January.
    8. Murphy, Ryan H. & Yeom, Luke D., 2017. "The Long-Run Impact of Agricultural Diversity on Economic Freedom at the Local Level," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 48(01), October.
    9. Sobel, Russell S., 2017. "The rise and decline of nations: the dynamic properties of institutional reform 1," Journal of Institutional Economics, Cambridge University Press, vol. 13(3), pages 549-574, September.
    10. Trey Malone & Jayson L. Lusk, 2016. "Brewing up entrepreneurship: government intervention in beer," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(3), pages 325-342, November.
    11. Ryan H. Murphy & Ellen Taylor & Dean Stansel, 2023. "Economic freedom at metropolitan statistical area borders," American Journal of Economics and Sociology, Wiley Blackwell, vol. 82(2), pages 141-149, March.
    12. Imran Arif & Adam Hoffer & Dean Stansel & Donald Lacombe, 2020. "Economic freedom and migration: A metro area‐level analysis," Southern Economic Journal, John Wiley & Sons, vol. 87(1), pages 170-190, July.
    13. Wiseman, Travis, . "U.S. Shadow Economies, Corruption, and Entrepreneurship: State-level Spatial Relations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 46(2).
    14. Gary A. Wagner & Jamie Bologna Pavlik, 2020. "Patent intensity and concentration: The effect of institutional quality on MSA patent activity," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 857-898, August.
    15. Joshua C. Hall & Donald J. Lacombe & Shree B. Pokharel, 2016. "Freedom and entrepreneurship: a spatial econometric approach," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(3), pages 404-411, November.
    16. Adam Martin & Matias Petersen, 2019. "Poverty Alleviation as an Economic Problem," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(1), pages 205-221.
    17. Stansel, Dean, 2019. "Economic Freedom in U.S. Metropolitan Areas," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 49(01), March.
    18. Millsap, Adam A., 2017. "The Role of Economic Freedom in Intercity Competition: A Framework and Some Evidence from U.S. Metropolitan Areas," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 48(2), November.
    19. Daniel L. Bennett & Boris Nikolaev, 2021. "Individualism, pro-market institutions, and national innovation," Small Business Economics, Springer, vol. 57(4), pages 2085-2106, December.
    20. Callais, Justin, 2022. "Free to Grow? A Matching Methods Analysis of Economic Freedom in the United States," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 52(01), December.
    21. Joshua C. Hall & Donald J. Lacombe & Timothy M. Shaughnessy, 2019. "Economic Freedom And Income Levels Across U.S. States: A Spatial Panel Data Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 40-49, January.

    More about this item

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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