By Stephan Gohmann, Ph.D.
Out of the 50 U.S. states and 10 Canadian provinces, Kentucky ranks No. 56 in economic freedom, as measured by the Frasier Institute’s Economic Freedom of North America Index. Among Kentucky’s surrounding states, only West Virginia ranks lower.
The index is a measurement of the size of government, amount of taxation and freedom of workers to engage in labor contracts.
Less economic freedom yields many less-than-desirable incomes:
- According to kidscount.org, only 39 percent of Kentucky’s young adults (ages 18 to 24) have enrolled in or completed college, compared with 42 percent to 53 percent in the surrounding states of Indiana, Illinois, Missouri, Tennessee and West Virginia.
- Kentucky’s median family income of $47,000 is second-lowest among surrounding states. Only Tennessee’s is lower at $45,700. The remaining surrounding states have median incomes ranging from $51,000 to $70,800.
- Kentucky ranks No. 45 in the percent of the population living in poverty.
In recent years, many economists have examined how institutions or “the rules of the game” drive these outcomes.
Some of the rules are cultural. Religious institutions and local heritage influence behaviors and can only change slowly.