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

Author

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  • Jamie Bologna

    (West Virginia University, College of Business and Economics)

  • Donald J. Lacombe

    (West Virginia University, Department of Agricultural and Natural Resource Economics)

  • Andrew T. Young

    (West Virginia University, College of Business and Economics)

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.

Suggested Citation

  • Jamie Bologna & Donald J. Lacombe & Andrew T. Young, 2014. "A Spatial Analysis of Incomes and Institutional Quality : Evidence from US Metropolitan Areas," Working Papers 14-11, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:14-11
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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1101&context=econ_working-papers
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    References listed on IDEAS

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    Cited by:

    1. Justin T. Callais & Jamie Bologna Pavlik, 2023. "Does economic freedom lighten the blow? Evidence from the great recession in the United States," Economics of Governance, Springer, vol. 24(3), pages 357-398, September.
    2. Jesús Peiró‐Palomino & Andrés J. Picazo‐Tadeo & Vicente Rios, 2020. "Well‐being in European regions: Does government quality matter?," Papers in Regional Science, Wiley Blackwell, vol. 99(3), pages 555-582, June.
    3. Sobel, Russell S., 2017. "The rise and decline of nations: the dynamic properties of institutional reform 1," Journal of Institutional Economics, Cambridge University Press, vol. 13(3), pages 549-574, September.
    4. Gary A. Wagner & Jamie Bologna Pavlik, 2020. "Patent intensity and concentration: The effect of institutional quality on MSA patent activity," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 857-898, August.
    5. Murphy, Ryan H. & Yeom, Luke D., 2017. "The Long-Run Impact of Agricultural Diversity on Economic Freedom at the Local Level," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 48(1), October.
    6. Trey Malone & Jayson L. Lusk, 2016. "Brewing up entrepreneurship: government intervention in beer," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(3), pages 325-342, November.
    7. Adam Martin & Matias Petersen, 2019. "Poverty Alleviation as an Economic Problem," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(1), pages 205-221.
    8. Millsap, Adam A., 2017. "The Role of Economic Freedom in Intercity Competition: A Framework and Some Evidence from U.S. Metropolitan Areas," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 48(2), November.
    9. Callais, Justin, 2022. "Free to Grow? A Matching Methods Analysis of Economic Freedom in the United States," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 52(1), December.
    10. The Nguyen Huynh, 2022. "Spatial effects of institutional quality on firm performance: evidence from Vietnam," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 89-105, November.
    11. Ryan H. Murphy & Ellen Taylor & Dean Stansel, 2023. "Economic freedom at metropolitan statistical area borders," American Journal of Economics and Sociology, Wiley Blackwell, vol. 82(2), pages 141-149, March.
    12. Imran Arif & Adam Hoffer & Dean Stansel & Donald Lacombe, 2020. "Economic freedom and migration: A metro area‐level analysis," Southern Economic Journal, John Wiley & Sons, vol. 87(1), pages 170-190, July.
    13. Wiseman, Travis, 2016. "U.S. Shadow Economies, Corruption, and Entrepreneurship: State-level Spatial Relations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 46(2), December.
    14. Stansel, Dean, 2019. "Economic Freedom in U.S. Metropolitan Areas," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 49(1), March.
    15. Joshua C. Hall & Donald J. Lacombe & Timothy M. Shaughnessy, 2019. "Economic Freedom And Income Levels Across U.S. States: A Spatial Panel Data Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 40-49, January.
    16. Jamie Bologna, 2017. "Contagious corruption, informal employment, and income: evidence from Brazilian municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(1), pages 67-118, January.
    17. Joshua C. Hall & Donald J. Lacombe & Shree B. Pokharel, 2016. "Freedom and entrepreneurship: a spatial econometric approach," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(3), pages 404-411, November.
    18. Daniel L. Bennett & Boris Nikolaev, 2021. "Individualism, pro-market institutions, and national innovation," Small Business Economics, Springer, vol. 57(4), pages 2085-2106, December.

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    More about this item

    Keywords

    institutional quality; economic freedom; income levels; income growth; spatial dependence; spillovers;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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