A Spatial Analysis of Incomes and Institutional Quality: Evidence from US Metropolitan Areas

36 Pages Posted: 26 Mar 2014

See all articles by Jamie Bologna Pavlik

Jamie Bologna Pavlik

Texas Tech University - Department of Agricultural and Applied Economics

Donald J. Lacombe

West Virginia University - Regional Research Institute

Andrew T. Young

Texas Tech University - Rawls College of Business

Date Written: March 25, 2014

Abstract

We use the Stansel (2013) metropolitan area economic freedom index and 25 conditioning variables to analyze the spatial relationships between institutional quality and economic outcomes across 381 U.S. metropolitan areas. Specifically, we allow for spatial dependence in both the dependent and independent variables and estimate how economic freedom impacts both per-capita income growth and per-capita income levels. We find that while economic freedom and income levels are directly and positively related, increases in economic freedom in one area result in negative indirect effects on income levels in surrounding areas. In addition, we find that economic freedom has an insignificant relationship with economic growth.

Keywords: institutional quality, economic freedom, income levels, income growth, spatial dependence, spillovers

JEL Classification: O43, O12

Suggested Citation

Bologna Pavlik, Jamie and Lacombe, Donald J. and Young, Andrew T., A Spatial Analysis of Incomes and Institutional Quality: Evidence from US Metropolitan Areas (March 25, 2014). Available at SSRN: https://ssrn.com/abstract=2414534 or http://dx.doi.org/10.2139/ssrn.2414534

Jamie Bologna Pavlik

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

Suite 167, 2625 Memorial Circle
TTU Administration
Lubbock, TX 79409
United States

Donald J. Lacombe

West Virginia University - Regional Research Institute ( email )

P.O. Box 6825
Morgantown, WV 26506-6825
United States
1-304-293-8543 (Phone)
1-304-293-6699 (Fax)

HOME PAGE: http://community.wvu.edu/~djl041/

Andrew T. Young (Contact Author)

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States

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