The Phoenix Center released a new study today that analyzes the effect of federal regulation on economic growth and job creation. The analysis, “Regulatory Expenditures, Economic Growth and Jobs: An Empirical
Study,” concludes that reducing the size of the federal regulatory budget by even modest amounts will have significant positive effects on both GDP and private sector growth.
From the news release:
In particular, the Phoenix Center estimates that even a small 5% reduction in the regulatory budget (about $2.8 billion) would result in about $75 billion in expanded private-sector GDP each year, with an increase in employment by 1.2 million jobs annually. On average, eliminating the job of a single regulator grows the American economy by $6.2 million and nearly 100 private sector jobs annually. Conversely, each million dollar increase in the regulatory budget costs the economy 420 private sector jobs. Accordingly, as Congress and the President struggle with the difficult decisions of how to shrink federal spending, the Phoenix Center recommends that a sensible place to start would be to investigate responsible cuts in the budgets of federal regulatory agencies.
“Our statistical analysis of historical data indicates that federal expenditures on regulatory activity have a significant impact on the size of the private-sector economy and private-sector employment,” says Dr. George S. Ford, Chief Economist of the Phoenix Center. “While the entire federal budget must be cut to address the deficit problem, the evidence indicates that reductions in the overall federal regulatory budget may substantially impact the growth of economic output and employment.”
The associated materials:
T. Randolph Beard, George S. Ford, Hyeongwoo Kim, and Lawrence J. Spiwak, Regulatory Expenditures, Economic Growth and Jobs: An Empirical Study, PHOENIX CENTER POLICY BULLETIN No. 28 (April 2011).
[pdf] [Press Release] [one pager] [slides]
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