A Spatial Analysis of Entrepreneurship and Institutional Quality: Evidence from U.S. Metropolitan Areas

Journal of Regional Analysis and Policy, 2015

52 Pages Posted: 14 Jan 2014 Last revised: 18 Sep 2015

See all articles by Jamie Bologna Pavlik

Jamie Bologna Pavlik

Texas Tech University - Department of Agricultural and Applied Economics

Date Written: February 27, 2014

Abstract

This paper uses the Stansel (2013) economic freedom index for a maximum of 375 U.S. metropolitan areas to estimate the effect of economic freedom on entrepreneurship while controlling for spatial dependence. This paper finds positive and statistically significant evidence that increases in economic freedom in one area result in increases in entrepreneurial activity in neighboring areas. Furthermore, the total (direct plus indirect) effects of an increase in economic freedom on entrepreneurship are positive and statistically significant, indicating that a positive-sum game is present. However, these effects are small in magnitude. In order to explain a cumulative one standard deviation increase in either one of the entrepreneurial measures presented in this paper, there would have to be an increase in the freedom index equivalent to moving from the least free area to the most free area.

Keywords: entrepreneurship, spillovers, institutional quality

JEL Classification: L260, O43

Suggested Citation

Bologna Pavlik, Jamie, A Spatial Analysis of Entrepreneurship and Institutional Quality: Evidence from U.S. Metropolitan Areas (February 27, 2014). Journal of Regional Analysis and Policy, 2015, Available at SSRN: https://ssrn.com/abstract=2378957 or http://dx.doi.org/10.2139/ssrn.2378957

Jamie Bologna Pavlik (Contact Author)

Texas Tech University - Department of Agricultural and Applied Economics ( email )

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Lubbock, TX 79409
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