Recent research has demonstrated that U.S. states are bellwethers of national institutional decline, serving as ‘laboratories of authoritarianism’ through voter repression and gerrymandering. We provide the first empirical evidence on the economic consequences of subnational democratic erosion in the United States. We find that autocratisation episodes during 2000-2023 lead to lower state per capita income and an increase in income inequality and deprivation. Innovation efforts (business R&D expenditure) and outputs (patenting) contract sharply, undermining the endogenous growth engine of the state economy. Results are robust when we account for Covid years or partisan ‘capture’ of state government.
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Vanessa Boese-Schlosser, Rodolphe Desbordes, Markus Eberhardt and Mario Larch
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