Mass Layoffs, Manufacturing and State Business Climates: Does State Policy Matter?

Abstract

This study provides the first estimates on the relationship between state public policies and job losses in the manufacturing sector. In addition, spatial model estimation is adopted to identify any effect that state policies may have on the adopting state as well as upon neighboring states. We find evidence that favorable ratings regarding some elements of a state's business climate coincide with a lower incidence of job loss. This relationship holds beyond the adopting state and is correlated with lower job losses in contiguous states. (JEL J50, J60, M50) * We are deeply indebted to the patience of the editor and the very helpful comments of two anonymous reviewers.

The Effect of Business Enabling Policies, Tax Treatment, Corruption and Political Connections on Business Climate

“…Similar results were explored also by Fereidouni and Masron [31]. Likewise, Surfield and Reddy [36] found that business climate coincides with a lower rate of job loss. According to Blume [37], the local economic policies are associated with the business climate.…”