State-Level Policy and Entrepreneurship: Dynamic Modeling

State-Level Policy and Entrepreneurship: Dynamic Modeling | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article State-Level Policy and Entrepreneurship: Dynamic Modeling Fouzia Awan This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6341668/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This research examines the dynamic relationship between state-level public policies and entrepreneurial activity in the United States. Using fixed-effects panel regression with forward lags of the dependent variable, I analyze the contemporaneous and prolonged effects of government size, taxation, and labor market policies on entrepreneurship. Furthermore, a Bayesian Panel Vector Autoregression (VAR) model, with impulse response function estimation, is used to model the dynamic responses of entrepreneurship to policy shocks. The findings reveal that a smaller government and reduced labor market regulation foster entrepreneurship, while the impact of taxation emerges with a delay. Additionally, I assess the average marginal effects of policy, accounting for state-level income and education. Other Economics Entrepreneurship Public Policy Bayesian Panel VAR Fixed-Effects Model Size of Government Taxation Labor Market Freedom Dynamic Analysis U.S. State policies Economic Freedom of North America (EFNA) Kauffman Early-Stage Entrepreneurship Index (KESE) Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6341668","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":436102609,"identity":"97473933-8481-457b-9d40-93b03aa2d4c6","order_by":0,"name":"Fouzia Awan","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA0ElEQVRIiWNgGAWjYBAC9gYgkQBlMROlhecATAuQRYIWMJBIIFYLe4/xhwc1h+XNJd8Yfi6osGHgb+9OwK+F54yBQcKxw4Y7Z+cYS884k8YgcebsBrxa7CVyDBIS2G4zbridYyDN23aYwUAiF78WHqCWAwn/bttvuHnG+DexWgwbEttuJ264wWNGpC08x4oZEvv+J284k1ZmzXMmjYegX3jYmzd//PEtzXbD8cObb/NU2Mjxt/fi14IEOAzAZhCrHATYH5CiehSMglEwCkYQAADCVkdrpmi6fQAAAABJRU5ErkJggg==","orcid":"https://orcid.org/0000-0002-4528-6298","institution":"Western Washington University","correspondingAuthor":true,"prefix":"","firstName":"Fouzia","middleName":"","lastName":"Awan","suffix":""}],"badges":[],"createdAt":"2025-03-31 04:55:58","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":true,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":true},"doi":"10.21203/rs.3.rs-6341668/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6341668/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":79633195,"identity":"40c1a980-a2f5-40f9-b5ac-ea2ed912db04","added_by":"auto","created_at":"2025-04-01 03:41:43","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1198802,"visible":true,"origin":"","legend":"","description":"","filename":"EntrepreneurshipandStatePublicPolicy.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6341668/v1_covered_ab36f28b-d373-477a-a034-4d40fb80b0b7.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eState-Level Policy and Entrepreneurship: Dynamic Modeling\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"University of Mississippi","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Entrepreneurship, Public Policy, Bayesian Panel VAR, Fixed-Effects Model, Size of Government, Taxation, Labor Market Freedom, Dynamic Analysis, U.S. State policies, Economic Freedom of North America (EFNA), Kauffman Early-Stage Entrepreneurship Index (KESE)","lastPublishedDoi":"10.21203/rs.3.rs-6341668/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6341668/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis research examines the dynamic relationship between state-level public policies and entrepreneurial activity in the United States. 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