Current Events: The Effects of Electricity Deregulation on State Economies*

Abstract. Panel regressions indicate that state electricity deregulation in the US is associated with higher housing prices, increased activity in the housing market, and lower wages, all of which are consistent with a model of compensating differentials wherein deregulation (which is shown to indeed lower electricity prices) increased the utility of state residents. On the other hand, there is no link between deregulation and job creation.