THE RELATIONSHIP BETWEEN ECONOMIC FREEDOM AND ECONOMIC DYNAMISM

We analyze the consequences of economic freedom on economic dynamism across U.S. states and over time. Using data from the Economic Freedom of North America index, we show that states with greater economic freedom have higher rates of gross and net job creation and establishment entry. The results a...

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Bibliographic Details
Published in:Contemporary economic policy 2017-04, Vol.35 (2), p.358-372
Main Authors: Barnatchez, Keith, Lester, Robert
Format: Article
Language:English
Subjects:
Economic conditions
Economic development
Economic equity
Economic justice
Economic policy
Economic research
Freedoms
North America
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Summary:We analyze the consequences of economic freedom on economic dynamism across U.S. states and over time. Using data from the Economic Freedom of North America index, we show that states with greater economic freedom have higher rates of gross and net job creation and establishment entry. The results are robust to the inclusion of many different control variables and alternative specifications, suggesting a connection between freedom and dynamism. This evidence supports theories in which government policies may impede business dynamism. (JEL 043, P16, R5)
ISSN:1074-3529
1465-7287
DOI:10.1111/coep.12194