Thursday, April 11, 2013

Shameless Self-Promotion

Not sure what's on the agenda, if anything, for this week, and I'm about to catch a flight to Maui for the Association of Private Enterprise Education meeting, so I thought I'd plug a few recent papers of mine.

(1) Economic Freedom of the World: An Accounting of the Literature

The Economic Freedom of the World (EFW) index was first produced by Gwartney, Lawson and Block (1996) and has been updated annually since. During this period, the EFW index has been cited in hundreds of academic articles. Here this paper provides an accounting and description of this literature. Of 402 articles citing the EFW index, 198 used the index as an independent variable in an empirical study. Over two-thirds of these studies found economic freedom to correspond to a “good” outcome such as faster growth, better living standards, more happiness, etc. Less than 4% of the sample found economic freedom to be associated with a “bad” outcome such as increased income inequality. The balance of evidence is overwhelming that economic freedom corresponds with a wide variety of positive outcomes with almost no negative tradeoffs.

(2) Capitalism and Labor Shares: A Cross-Country Panel Study, 1970 to 2010 

The paper examines the empirical relationship between the institutions of economic freedom and labor shares in a panel of 90 countries covering 1970 through 2005. The paper finds that a sample standard deviation increase in the Fraser Institute’s Economic Freedom of the World (EFW) score is associated with a 15 percent increase in labor share.

(3) Do Travel Visa Restrictions Impede Tourist Travel? [E-mail me if you want a copy.] 

Yes. Using a travel visa data set developed by Lawson and Lemke (2012) and travel flow data from the World Bank and the UN’s World Tourism Organization (UNWTO), we investigate the deterrent effect of travel visa requirements on travel flows. At the aggregate level, a one standard deviation more severe travel visa regime, as measured, is associated with a 30 percent decrease in inbound travel. At the bilateral level, having a travel visa requirement on a particular country is associated with a 70% reduction in inbound travel from that country. The gains associated with eliminating travel visas appear to be very large.

(4) Alchian and Allen Revisited: Law Enforcement and the Price of Weed. [E-mail me if you want a copy.] 

Alchian and Allen (1964) theorized that the imposition of a fixed fee or a unit cost in a market with multiple quality grades of the good would encourage consumption of the higher quality grades. Using newly available data on marijuana prices by state, we empirically test the hypothesis that the price of higher quality marijuana will be higher in states with more strict enforcement of marijuana possession laws. Consistent with the Alchian-Allen theorem, the relative price of both medium- and high-quality marijuana are found to be greater in states with stricter law enforcement, suggesting an increase in demand for such varieties.

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