A Matched Pairs Analysis of State Growth Differences
Brian L. Goff
Western Kentucky University - Department of Economics & Marketing
Western Kentuck University - Department of Economics
Stephen E. Lile
Western Kentucky University - Gordon Ford College of Business
Contemporary Economic Policy, Vol. 30, Issue 2, pp. 293-305, 2012
The American states have provided a rich laboratory in which to examine influences on economic growth, physical capital, human capital, and a variety of policy variables. Existing studies typically use broad cross sections of all states or particular regional subsamples. Pairwise matching is an alternative design for better controlling of omitted variables. We estimate a growth model of U.S. states for 1997–2005 before and after applying different pairwise matching techniques. Our results indicate that sample estimates based on pairwise matching substantially improve the overall ability of the growth model to identify the growth‐enhancing effects of lower tax burdens in general and lower individual income‐tax rates in particular. These effects are more pronounced with narrower matching criteria.
Number of Pages in PDF File: 13
JEL Classification: H00, C29, O40Accepted Paper Series
Date posted: April 19, 2012
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