Economic Freedom and Entrepreneurship: A Panel Study of the United States

This paper runs panel regressions to test the impact of economic freedom in the 50 states on five different measures of Entrepreneurship. It finds that higher average levels of economic freedom lead to higher average business birth rates and, in some cases, more patents per capita in a state. When the paper examines the sub-components of the freedom index, and it finds that smaller size of government is important for higher levels of business births and patents. The paper finds no consistent significant connection between economic freedom and venture capital per capita, sole proprietorship rates, or the Kauffman index of entrepreneurship.

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