State Level Poverty Rates, Rurality, Economic Freedom and Labor Market Regulation

Abstract

Many US local economic development strategies rely on tax and other monetary incentives to attract employers. This study looks at whether other incentives related to “economic freedom” and labor market regulation could also improve local conditions. Two measures developed by Murphy (JRAP, 2020) are used to proxy these incentives. Using 2019 cross sectional state level data, from least squares estimates it appears that such incentives can reduce state level poverty rates. Some policy implications are discussed, including for the recently enacted federal Opportunity Zone policy.