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Purpose – The purpose of this paper is to examine the correlation between the degree of economic freedom in state institutions and industry employment and then determine how these correlations relate to economic growth. Design/methodology/approach – The authors find the correlation between employment and economic freedom for each NAICS industry code and then calculate total employment in industries with positive correlation and negative correlations. The authors use these values in a GDP equation. Findings – The authors find that employment growth in industries characterized by a negative correlation is associated with a decline in state per capita GDP. When the correlations between employment and economic freedom are positive, state per capita GDP tends to grow, even after accounting for overall economic freedom in the state. Research limitations/implications – Eliminating or reducing opportunities for firms to use government institutions to gain special treatment will lead to greater economic growth. Originality/value – This paper allows the data to determine which industries potentially engage in productive and unproductive entrepreneurship.

Geoffrey Brennan and James M. Buchanan, in their 1980 book The Power to Tax, hypothesize that “the potential for fiscal exploitation varies inversely with the number of competing governmental units in the inclusive territory.” This paper tests that theory at the local level using data for US metropolitan statistical areas (MSA). MSAs are constructed on the basis of commuting patterns and are meant to delineate the local economy. Because of their construction, MSAs typically contain several distinct and nonoverlapping political jurisdictions, each with the power to tax residents, mitigate local externalities, and provide local public goods. Following previous literature, we measure “competing governmental units” using the number of general-purpose local governments within an MSA, adjusted for land area and population. In contrast to previous work, which uses less comprehensive measures of “fiscal exploitation,” we test Brennan and Buchanan’s “Leviathan hypothesis” using various measures of MSA economic freedom, rather than more limited measures of spending or revenue, as our dependent variable. We find mixed evidence that the number of competing jurisdictions is positively associated with economic freedom. When examining the individual components of economic freedom, we find a positive and statistically significant relationship with labor market freedom but only a weak relationship with government spending or taxes. These results offer mixed support for the Leviathan hypothesis, though support strengthens when metro areas in the South are excluded.

Purpose – The purpose of this paper is to focus on the impact of economic freedom on entrepreneurial activity in the service sector. Specifically, the paper examines how economic freedom at the state level affects employment among North American Industry Classification System (NAICS) six-digit service industries. Design/methodology/approach – The paper uses a fixed effects model to predict the effect of economic freedom on employment in each of the NAICS six-digit service industries. The paper uses the significance of the economic freedom coefficients to determine which industries grow and which shrink with increases in economic freedom. Findings – The empirical findings reveal that economic freedom improves job growth for some, but not for all industries. Employment tends to grow in the six-digit industries that are categorized as finance and insurance, administrative and waste services, and professional and technical services. Employment in many of the health care and social assistance industries as wel...

Debt-for-nature swaps (DNSs) are a method of simultaneously addressing debt problems in developing countries and protecting environmentally-sensitive tracts of land and forests. The number and scope of DNSs declined after a flurry of activity in the early to mid-1990s. While a number of problems have been identified that may have contributed to this pattern the literature has ignored the role that weakly defined and enforced property rights may play. DNSs are interpreted as Coasian bargains and an explanation for their decline based upon property rights, transactions costs, and competitive bidding is advanced.

This study uses data on 487 nursing homes in Florida for 1996 to examine several issues about the efficiency of nursing homes. Chain affiliation (national, regional or independent) is examined, as is profit status (for-profit or non-profit). For the first time quality of care is also included, due to the uniqueness of the data which contains quality scores assigned by State of Florida officials. Multiple regression analysis, as well as data envelopment analysis (DEA), is used. The results, in general, indicate that substantial inefficiencies do exist in the range of 20% to 30%, which is consistent with previous efficiency studies in this industry. Without controlling for quality, for-profit firms and chain affiliated firms are shown to be slightly more efficient than their independent and non-profit counterparts. However, chain affiliated firms scored lower on quality than independents and for-profit firms scored lower on quality than non-profit firms. When controlling for quality, the profit status of the firm and room utilization rates are positively and significantly related to efficiency. However, in the presence of the quality control variable, there is no evidence to suggest that chain affiliation impacts efficiency.

In the cross-country literature, cognitive skills are robust predictors of economic growth. We investigate claims by psychologists that the same is true at the state level. In a variety of specifications using four proxies for average state IQ used in the psychology literature, little evidence is found for a robust IQ-growth relationship at the state level.

Recent empirical literature finds that greater economic freedom at the state level tends to have a positive effect on entrepreneurial activity and economic growth generally. However, state boundaries are relatively arbitrary, and the level of economic freedom in local economies can vary widely within individual states. While there is currently no economic freedom index for metropolitan areas, this paper uses data for government revenue and expenditure as a proxy. It provides the first examination of that relationship at the local level, using data on net new business formation for 288 U.S. metropolitan areas over the period 1990-2003. We found a statistically significant negative relationship between increases in all seven selected sources of revenue (used to fund an equal increase in spending on public welfare) and net new business formation. We also found that replacing welfare spending with higher spending for seven of eight selected spending categories was positively and significantly associated with net new business formation.