Economic freedom, homeownership, and state labor market conditions

Abstract

Purpose – The purpose of this paper is to reconcile research finding that labor market outcomes are related to economic freedom for entrepreneurs and separate research finding that higher homeownership rates are associated with more unemployment. Design/methodology/approach – Using panel data covering the 50 states over 1981-2009, this paper analyzes the relationship between labor market conditions, economic freedom, and homeownership rates. Findings – The results indicate that economic freedom is associated with favorable labor market conditions but that the relationship between homeownership and poor labor market outcomes is small and insignificant in most specifications once economic freedom is accounted for. Originality/value – This paper is the first paper to examine the relationship between labor market outcomes and both homeownership and economic freedom. The results suggest that the economic environment for entrepreneurs is more important than any rigidities created by homeownership.