The Impact of State-Level Regulatory Accumulation on Economic Growth
Although federal regulations are the usual focus of popular discourse on deregulation, state-level regulations are important too. My 2024 study with John T. H. Wong examines the causal relationship between state-level regulatory accumulation and economic growth. Using novel measurement techniques and robust statistical analysis, we find substantial evidence that higher levels of state regulation significantly reduce state GDP growth. Specifically, a 10 percent increase in state regulatory restrictions leads to a 0.37 percentage point reduction in annual GDP growth. Regulatory reform—specifically, reform that leads to substantial elimination of red tape—would dramatically boost economic growth. A typical state could increase its annual GDP growth rate by about 1.5 percentage points by eliminating 40 percent of its regulations.
