Economic Freedom and Growth in U.S. State-Level Market Incomes at the Top and Bottom

Contemporary Economic Policy (Forthcoming)

44 Pages Posted: 1 Dec 2014 Last revised: 31 Dec 2015

See all articles by Travis Wiseman

Travis Wiseman

Mississippi State University - Department of Finance and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 1, 2015

Abstract

This paper investigates the relationship between economic freedom and income growth and inequality across U.S. states over the period 1979 to 2011. The focus is on market income at the top and bottom of the income distribution. Results show that increases in overall freedom are associated with average income growth. When viewed separately, an increase in overall freedom is associated with larger income growth rates for income earners in the bottom 90% relative to the top 10%. Interestingly, results show that increases in overall economic freedom are related to larger relative growth rates for top 10% incomes within high income states, and larger relative growth rates for bottom 90% incomes within low income states. Top-to-bottom income ratio regressions suggest a negative and statistically significant relationship between economic freedom and income inequality.

Keywords: Inequality, Economic Freedom, Regulation, Spatial dependence, U.S. states

JEL Classification: D63, H11, L51

Suggested Citation

Wiseman, Travis, Economic Freedom and Growth in U.S. State-Level Market Incomes at the Top and Bottom (February 1, 2015). Contemporary Economic Policy (Forthcoming). Available at SSRN: https://ssrn.com/abstract=2532224 or http://dx.doi.org/10.2139/ssrn.2532224

Travis Wiseman (Contact Author)

Mississippi State University - Department of Finance and Economics ( email )

Mississippi State, MS 39762
United States

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