The Heterogeneous Effects of Economic Freedom on Labor Market Outcomes

Wall, Howard and Ferrarini, Tawni (2025): The Heterogeneous Effects of Economic Freedom on Labor Market Outcomes.

Abstract

This paper shows how state-level economic freedom has heterogeneous effects on labor market outcomes. To isolate own-state effects we adopt a difference-in-difference approach that compares counties in metro areas that straddle state borders. In contrast with previous studies, we do not find that economic freedom is related to the labor market outcomes of the entire population. This result masks heterogeneous effects across demographic groups, however, and we find substantial differences across levels of educational attainment, in particular. Specifically, increases in economic freedom are associated with improved labor market outcomes for those with the least education, as well as for Hispanics.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic freedom, labor market outcomes
• Subjects: H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H73 - Interjurisdictional Differentials and Their Effects; J - Labor and Demographic Economics > J0 - General > J08 - Labor Economics Policies; P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R23 - Regional Migration ; Regional Labor Markets ; Population ; Neighborhood Characteristics

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