Entrepreneurial Action, Public Policy, and Economic Outcomes

Entrepreneurial Action, Public Policy, and Economic Outcomes

New Thinking in Political Economy series

Edited by Robert F. Salvino Jr., Michael T. Tasto and Gregory M. Randolph

Examining the economics of entrepreneurship from the perspectives of productive versus unproductive entrepreneurial behavior and the role of institutions in economic outcomes, the authors in this book seek to advance the research on institutions by providing a simple framework to analyze the broader, long-term consequences of economic policies. They examine the relationship between economic freedom and economic outcomes and summarize empirical evidence and theory. The book also provides practical policy solutions that are based on the authors' cogent analyses.

Chapter 6: Institutions and entrepreneurial productivity in the American states

Gregory M. Randolph

Subjects: business and management, entrepreneurship, economics and finance, austrian economics, politics and public policy, public policy

Abstract

Recent research has examined the relationship between institutional quality and entrepreneurial activity in light of Baumol's (1990) theory of productive and unproductive entrepreneurship. This chapter reviews the recent literature regarding entrepreneurship and institutions and provides an analysis of the impact of economic freedom on entrepreneurial productivity. The results suggest that lower levels of government freedom result in greater interest group populations while greater labor market freedom encourages firm births in states in the U.S. These results provide further evidence that institutions impact the decisions and productivity of entrepreneurs in society.

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