The Heterogeneous Effects of Economic Freedom on Labor Market Outcomes

Howard Wall and Tawni Ferrarini

MPRA Paper from University Library of Munich, Germany

Abstract: This paper shows how economic freedom can have heterogeneous effects on unemployment rates, employment-population ratios, and labor force participation. Our difference-in-difference approach compares counties in metropolitan statistical areas that straddle state borders, isolating own-state effects of economic freedom. Although overall economic freedom does not significantly affect labor market outcomes for the entire population, its effects are diverse and varied according to age, educational attainment, sex, and race. This empirical study also examines the heterogeneous effects of specific areas of economic freedom (government spending, taxation, and labor market regulations), highlighting the complexity of these relationships and suggesting that economic freedom is not a one-size-fits-all policy approach.

Keywords: Economic freedom; labor market outcomes (search for similar items in EconPapers)
JEL-codes: H73 J08 P16 R12 R23 (search for similar items in EconPapers)
Date: 2025-07-02
New Economics Papers: this item is included in nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:125191

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