Economic Freedom and Income Levels Across U.S. States: A Spatial Panel Data Analysis

Hall, Joshua C.; Lacombe, Donald J.; Shaughnessy, Timothy M.

doi:10.1111/coep.12287

Cited by 21 publications

(9 citation statements)

References 38 publications

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“…And, reduction in government revenues may lead to less social spending and in turn, harm health outcomes (Forster et al, 2019;Rubin et al, 2016) The majority of the existing literature has examined the impact of economic freedom on income and economic growth (e.g. Faria and Montesinos, 2009;Hall et al, 2019). Comparatively, only a few studies have analysed the relationship of economic freedom with non-economic variables.…”

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confidence: 99%

Does economic freedom improve health outcomes in sub-Saharan Africa?

Sharma

2020

IJSE

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PurposeThe purpose of this study is to examine the impact of economic freedom on four key health indicators (namely, life expectancy, infant mortality rate, under-five mortality rate and neonatal mortality rate) by using a panel dataset of 34 sub-Saharan African countries from 2005 to 2016.Design/methodology/approachThe study obtains data from the World Development Indicators (WDI) of the World Bank and the Fraser Institute. It uses fixed effects regression to estimate the effect of economic freedom on health outcomes and attempts to resolve the endogeneity problems by using two-stage least squares regression (2SLS).FindingsThe results indicate a favourable impact of economic freedom on health outcomes. That is, higher levels of economic freedom reduce mortality rates and increase life expectancy in sub-Saharan Africa. All areas of economic freedom, except government size, have a significant and positive effect on health outcomes.Research limitations/implicationsThis study analyses the effect of economic freedom on health at a broad level. Country-specific studies at a disaggregated level may provide additional information about the impact of economic freedom on health outcomes. Also, this study does not control for some important variables such as education, income inequality and foreign aid due to data constraints.Practical implicationsThe findings suggest that sub-Saharan African countries should focus on enhancing the quality of economic institutions to improve their health outcomes. This may include policy reforms that support a robust legal system, protect property rights, promote free trade and stabilise the macroeconomic environment. In addition, policies that raise urbanisation, increase immunisation and lower the incidence of HIV are likely to produce a substantial improvement in health outcomes.Originality/valueExtant economic freedom-health literature does not focus on endogeneity problems. This study uses instrumental variables regression to deal with endogeneity. Also, this is one of the first attempts to empirically investigate the relationship between economic freedom and health in the case of sub-Saharan Africa.

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confidence: 99%

Does economic freedom improve health outcomes in sub-Saharan Africa?

Sharma

2020

IJSE

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“…A positive association between a country’s level of economic freedom and a number of (good) economic outcomes is well-established in the literature including growth (e.g., Heckelman 2000 ; De Haan 2003 ; Dawson 2003 ; Grier and Grier 2021 ), investment (Bengoa and Sanchez-Robles 2003 ; Kapuria-Foreman 2007 ), and entrepreneurship (Nyström 2008 ). 2 Similar evidence can be found at the U.S. state-level (Sobel 2008 ; Compton et al 2011 ; Wiseman and Young 2013 ; Hall et al 2019 ). There is also a growing body of literature connecting MSA-level freedom to economic outcomes such as personal income (Bologna et al 2016 ), entrepreneurship (Bologna 2015 ; Bennett 2019 , 2021 ), and patent activity (Wagner and Bologna Pavlik 2020 ).…”

Section: Introductionmentioning

confidence: 55%

Does economic freedom lighten the blow? Evidence from the great recession in the United States

Callais

Pavlik

2022

Econ Gov

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The Great Recession led to a large decline in economic activity throughout the entire United States with significant variation in its severity across regions. Our paper examines the role of economic freedom in explaining these differences at the metropolitan statistical area (MSA) level. We use the Stansel ( 2013 ; 2019 ) MSA-level economic freedom index to analyze the relationship between institutional quality and economic outcomes throughout the crisis period. Using a panel dataset of 382 MSAs from 2002 to 2012, we find that economic freedom is associated with enhanced economic outcomes – lower unemployment rates, more employment per 100 persons, and higher income per capita. This holds true even when examining a cross-section of MSAs using data from the crisis period alone. We supplement these findings with a matching analysis where we find that MSAs that experienced meaningful increases in economic freedom in the five-year period before the Great Recession (2002–2007) had quicker recoveries – in terms of unemployment rates and income – than their matched counterfactuals from 2007 to 2012. Overall, our findings suggest that economic freedom did “lighten the blow” from the Great Recession.

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“…The most common scientific position is that the quality of economic development is manifested in the living standard of the population (Hall, Lacombe, & Shaughnessy, 2018).…”

Section: Resultsmentioning

confidence: 99%