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 state-level economic freedom has heterogeneous effects on labor market outcomes. To isolate own-state effects we adopt a difference-in-difference approach that compares counties in metro areas that straddle state borders. In contrast with previous studies, we do not find that economic freedom is related to the labor market outcomes of the entire population. This result masks heterogeneous effects across demographic groups, however, and we find substantial differences across levels of educational attainment, in particular. Specifically, increases in economic freedom are associated with improved labor market outcomes for those with the least education, as well as for Hispanics.

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
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