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Regulation and poverty: an empirical examination of the relationship between the incidence of federal regulation and the occurrence of poverty across the US states

Author

Listed:
  • Dustin Chambers

    (Mercatus Center at George Mason University
    Salisbury University)

  • Patrick A. McLaughlin

    (Mercatus Center at George Mason University)

  • Laura Stanley

    (Mercatus Center at George Mason University)

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% increase in the effective federal regulatory burden on a state is associated with an approximate 2.5% increase in the poverty rate. This paper fills an important gap in both the poverty and the regulation literatures because it is the first one to estimate the relationship between the two variables. Moreover, our results have practical implications for federal policymakers and regulators because the greater poverty that results from additional regulations should be considered when weighing the costs and benefits of additional regulations.

Suggested Citation

  • Dustin Chambers & Patrick A. McLaughlin & Laura Stanley, 2019. "Regulation and poverty: an empirical examination of the relationship between the incidence of federal regulation and the occurrence of poverty across the US states," Public Choice, Springer, vol. 180(1), pages 131-144, July.
    • Handle: RePEc:kap:pubcho:v:180:y:2019:i:1:d:10.1007_s11127-018-0603-8
    DOI: 10.1007/s11127-018-0603-8
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    References listed on IDEAS

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    Cited by:

    1. Juan S. Mora-Sanguinetti & Javier Quintana & Isabel Soler & Rok Spruk, 2024. "The heterogenous effects of a higher volume of regulation: evidence from more than 200k Spanish norms," Journal of Regulatory Economics, Springer, vol. 65(1), pages 137-153, June.
    2. Dustin Chambers & Colin O’Reilly, 2022. "The economic theory of regulation and inequality," Public Choice, Springer, vol. 193(1), pages 63-78, October.
    3. Nicholas Reinarts & Vitor Melo, 2023. "ADA to Ph.D.? The Americans with disabilities act and post-secondary educational attainment," Public Choice, Springer, vol. 197(3), pages 421-432, December.
    4. Broughel, James & Chambers, Dustin, 2021. "Federal Regulation and Mortality in the 50 States," Working Papers 10289, George Mason University, Mercatus Center.
    5. Choudhury, Sanchari, 2023. "The causal effect of regulation on income inequality across the U.S. states," European Journal of Political Economy, Elsevier, vol. 80(C).
    6. Chambers, Dustin & O'Reilly, Colin, 2022. "Regulation and income inequality in the United States," European Journal of Political Economy, Elsevier, vol. 72(C).
    7. de Lucio, Juan & Mora-Sanguinetti, Juan S., 2022. "Drafting “better regulation”: The economic cost of regulatory complexity," Journal of Policy Modeling, Elsevier, vol. 44(1), pages 163-183.
    8. Chambers, Dustin, 2021. "Toward a Formalization of Policy Analytics," Working Papers 11019, George Mason University, Mercatus Center.
    9. Juan S. Mora-Sanguinetti & Javier Quintana & Isabel Soler & Rok Spruk, 2023. "Sector-level economic effects of regulatory complexity: evidence from Spain," Working Papers 2312, Banco de España.
    10. Dincer, Oguzhan & Gunalp, Burak, 2020. "The effects of federal regulations on corruption in U.S. States," European Journal of Political Economy, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    Regulation; Poverty; States; FRASE; Regressive effects; RegData;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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