Economic Freedom and Employment Growth in U.S. States

Federal Reserve Bank of St. Louis Working Paper No. 2010-006A

32 Pages Posted: 4 Mar 2010

See all articles by Thomas A. Garrett

Thomas A. Garrett

Federal Reserve Bank of St. Louis - Research Division

Russell M. Rhine

St. Mary's College of Maryland - Department of Economics

Date Written: March 3, 2010

Abstract

We extend earlier models of economic growth and development by exploring the effect of economic freedom on U.S. state employment growth. We find that states with greater economic freedom – defined as the protection of private property and private markets operating with minimal government interference – experienced greater rates of employment growth. In addition, we find that less restrictive state and national government labor market policies have the greatest impact on employment growth in U.S. states. Except for labor market policies, we find that state employment growth is influenced by state and local government policies, but not the policies of all levels of government, including the national government. Our results suggest that policy-makers concerned with employment should seriously consider the degree to which their own labor market policies, as well as those of the national government, may be limiting economic growth and development in their respective states.

Keywords: Economic Freedom, Employment, Development

JEL Classification: O20, O51, R58, H70

Suggested Citation

Garrett, Thomas A. and Rhine, Russell M., Economic Freedom and Employment Growth in U.S. States (March 3, 2010). Federal Reserve Bank of St. Louis Working Paper No. 2010-006A, Available at SSRN: https://ssrn.com/abstract=1564262 or http://dx.doi.org/10.2139/ssrn.1564262

Thomas A. Garrett (Contact Author)

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
Saint Louis, MO 63011
United States

Russell M. Rhine

St. Mary's College of Maryland - Department of Economics ( email )

18952 E. Fisher Road
St. Mary's City, MD 20686-3001
United States

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