Regulation and Poverty: An Empirical Examination of the Relationship between the Incidence of Federal Regulation and the Occurrence of Poverty Across the States

23 Pages Posted: 26 Apr 2018

See all articles by Dustin Chambers

Dustin Chambers

Salisbury University - Department of Economics and Finance

Patrick A. McLaughlin

Mercatus Center at George Mason University

Laura Stanley

Independent

Date Written: April 26, 2018

Abstract

We estimate the impact of federal regulations on poverty rates in the 50 US states using the recently created Federal Regulation and State Enterprise (FRASE) index, which is an industry-weighted measure of the burden of federal regulations at the state level. Controlling for many other factors known to influence poverty rates, we find a robust, positive, and statistically significant relationship between the FRASE index and poverty rates across states. Specifically, we find that a 10 percent increase in the effective federal regulatory burden on a state is associated with an approximate 2.5 percent increase in the poverty rate. This paper fills an important gap in both the poverty and the regulation literature because it is the first paper to estimate the relationship between these variables. Moreover, our results have practical implications for federal policymakers and regulators, because the increased poverty that results from additional regulations should be considered when weighing the costs and benefits of additional regulations.

Keywords: regulation, poverty, states, FRASE index

JEL Classification: D31, I32, J38, K20, R10

Suggested Citation

Chambers, Dustin and McLaughlin, Patrick A. and Stanley, Laura, Regulation and Poverty: An Empirical Examination of the Relationship between the Incidence of Federal Regulation and the Occurrence of Poverty Across the States (April 26, 2018). MERCATUS WORKING PAPER. Available at SSRN: https://ssrn.com/abstract=3169361 or http://dx.doi.org/10.2139/ssrn.3169361

Dustin Chambers (Contact Author)

Salisbury University - Department of Economics and Finance ( email )

Salisbury, MD 21801
United States

Patrick A. McLaughlin

Mercatus Center at George Mason University ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States
(703) 993-9670 (Phone)

HOME PAGE: http://www.patrickamclaughlin.com

Laura Stanley

Independent

No Address Available

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