New Hampshire residents enjoyed the most economic freedom in the U.S. for the second year in a row and New York residents had the least, but the freest “state” in North America isn’t in the U.S., according to a new Fraser Institute report.
The Canadian-based public policy think tank ranked Alberta, Canada, the most-free jurisdiction in North America in its 2016 Economic Freedom in North America report, and Canadian provinces on average bested U.S. states in the report for the second year in a row.
“The link between economic freedom and prosperity is clear — people who live in states that support low taxation, limited government and flexible labor markets have higher living standards and greater economic opportunity,” said Fred McMahon, the report’s co-author and the Dr. Michael A. Walker research chair in Economic Freedom at the Fraser Institute Tuesday.
The think tank measured government spending, taxation and labor market restrictions using 2014 data, the most recently available data, for Canada, Mexico and the U.S.
Economic freedom in U.S. states declined over the last decade, with some fluctuations. The average score for U.S. states fell from 8.26 out of 10 in 2004, to 7.7 in 2014. That’s up slightly from 7.59 in the 2015 report, using 2013 data. Changes at the federal level influenced the downward trend, the report said. (RELATED: United States Drops In Overall Freedom Ranking)
Florida followed New Hampshire among U.S states with the most economic freedom, followed by Texas and South Dakota, which tied for third among the most-free states.
California was the second-worst state for economic freedom, followed by a three-way tie among Hawaii, New Mexico and Alaska for the third-worst states.
The average per capita income in the top 25 percent of the most-free U.S. states in 2014 was 4.7 percent above the national average of $45,083, compared to 3.3 percent below that figure on average in the bottom 25 percent of states, the study found.
“Americans have been voting with their feet against the ‘big government’ approach of New York and California,” said Dean Stansel, an economics professor at Southern Methodist University who co-authored the report. “Florida and Texas have experienced more than two-and-a-half times faster population growth in recent years, and they’re among the freest states in the country.”
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