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Economic Freedom, Capital, and Growth: Evidence from the States

Author

Listed:
  • Ihlenfeld, Sarah

    (West Virginia University)

  • Hall, Joshua

    (West Virginia University)

  • Zhou, Yang

    (University of North Texas)

Abstract

Hall et al. (2010) develop a growth model where the allocation and productivity of human and physical capital depend on the quality of institutions in a country. We apply their model to the US states from 1980 to 2000. Using the Economic Freedom of North America as our measure of institutional quality, we find evidence that increases in human capital lead to increases in output per worker only in states with average EFNA scores above 5.91. Physical capital, unlike in the cross-country case, always has a positive effect on output per worker.

Suggested Citation

  • Ihlenfeld, Sarah & Hall, Joshua & Zhou, Yang, 2022. "Economic Freedom, Capital, and Growth: Evidence from the States," American Business Review, Pompea College of Business, University of New Haven, vol. 25(1), pages 25-35, May.
    • Handle: RePEc:ris:ambsrv:0047
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    File URL: https://digitalcommons.newhaven.edu/americanbusinessreview/vol25/iss1/3/
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    Cited by:

    1. James E. Payne & James W. Saunoris & Saban Nazlioglu & Cagin Karul, 2023. "The convergence dynamics of economic freedom across U.S. states," Southern Economic Journal, John Wiley & Sons, vol. 89(4), pages 1216-1241, April.
    2. Vincent J. Miozzi & Benjamin Powell, 2023. "US state‐level economic freedom during the COVID‐19 pandemic," American Journal of Economics and Sociology, Wiley Blackwell, vol. 82(4), pages 349-364, July.

    More about this item

    Keywords

    Economic Freedom; Human Capital; Economic Growth; Migration;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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