IESET.
Hypotheses·growth·us_eu_gdp_per_capita_divergence_policy_causes

US GDP per capita (PPP, constant $) exceeds the EU15 weighted average by approximately 50% as of 2023, with the gap widening from ~20% in 2000 after converging during 1980-1995.

The divergence is primarily explained by policy-channel differences that are empirically separable from demographic, geographic, or capital-stock differences: (a) US product- market deregulation and competition-policy activism vs EU regulatory density (OECD PMR); (b) US labour-market flexibility vs EU employment protection (OECD EPL); (c) capital-market depth and venture-financing breadth; (d) energy-cost differential post-2011 driven by shale vs Energiewende/gas-import dependence; (e) tax structure favouring capital formation. The claim is that demographic + trade-openness + human-capital controls leave policy channels as the binding explanation.

PARTIALengine/runs/us_eu_gdp_per_capita_divergence_policy_causes

PARTIAL — coef=+0.1801, p=0.565 (above α=0.1); direction inconclusive

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The evidence is suggestive but not decisive. coef=+0.1801, p=0.565 (above α=0.1); direction inconclusive

why it matters

Growth claims can look convincing in single success stories. This test asks whether the pattern survives a broader comparison.

how the test works

It compares 15 country or place units from 1970 to 2023, using a panel fe decomposition design, with fixed effects for country and year.

what was measured
Possible pathway
  • Product market regulation aggregate
  • Employment protection legislation overall
What we checked
  • Income per capita cost-of-living adjusted constant
  • Income per capita constant
  • Income per hour worked cost-of-living adjusted
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/us_eu_gdp_per_capita_divergence_policy_causes
1007550250197019972023USADEUFRAITAESPNLDBEL
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show gdp_per_capita_ppp_constant across 15 sampled countries over 1970–2023.
The shapes above are stylised — none of the lines are real data.
Placeholder for us_eu_gdp_per_capita_divergence_policy_causes. Published chart will be generated from engine/runs/us_eu_gdp_per_capita_divergence_policy_causes/chart_data.json.

Who has skin in the game — schools predicting on this

6 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Degrowth / Ecological Macroeconomicswins if MIXEDpartial/no-call⇄New Institutional Economicswins if SUPPORTEDpartial/no-callMarket Socialism (Lange-Lerner tradition)wins if MIXEDpartial/no-callMarxian Political Economywins if MIXEDpartial/no-callNew Keynesian (mainstream synthesis)wins if MIXEDpartial/no-callSocial Democraticwins if REFUTEDpartial/no-call⇄

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:53:07Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

US GDP per capita (PPP, constant $) exceeds the EU15 weighted average by approximately 50% as of 2023, with the gap widening from ~20% in 2000 after converging during 1980-1995. The divergence is primarily explained by policy-channel differences that are empirically separable from demographic, geographic, or capital-stock differences: (a) US product- market deregulation and competition-policy activism vs EU regulatory density (OECD PMR); (b) US labour-market flexibility vs EU employment protection (OECD EPL); (c) capital-market depth and venture-financing breadth; (d) energy-cost differential post-2011 driven by shale vs Energiewende/gas-import dependence; (e) tax structure favouring capital formation. The claim is that demographic + trade-openness + human-capital controls leave policy channels as the binding explanation.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if policy channels (PMR, EPL, economic-freedom, tax, institutional quality) jointly explain less than 50% of the US-EU15 GDP-per-capita gap after demographics + trade + human-capital controls, or if including IRL and LUX in the baseline reverses the sign on core policy coefficients (indicating the divergence is FDI-distortion-driven rather than policy-driven).

formal test & threshold
test:      policy_channel_share_of_explained_variance
threshold: policy channel share >= 0.50 of explained variance; sign-stable exclusion robustness

Method

Template
panel_fe_decomposition
Fixed effects
country, year
Clustering
country
Sample
15 countries · 1970 – 2023
Evidence type
associational

Decomposition estimates each policy-channel contribution after controlling for demographics, trade openness, and human capital. Robustness: (a) excluding IRL and LUX; (b) alternate PMR vintages; (c) Fraser EFW vs Heritage IEF substitution for regulatory index.

Data

VariableSourceTransform
gdp_per_capita_ppp_constant
outcome
world_bank_wdi:NY.GDP.PCAP.PP.KDtier 2
log
gdp_per_capita_constant
outcome
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
gdp_per_hour_worked_ppp
outcome
oecd:OECD.SDD.NAD.PRODtier 2
—
product_market_regulation_aggregate
channel
oecd_pmr:OECD.ECO.GCRDtier 4
level
employment_protection_legislation_overall
channel
oecd:OECD.ELS.EMPtier 2
level
economic_freedom_index
channel
fraser_efw:aggregate_scoretier 4
—
institutional_quality_government_effectiveness
channel
wgi:GOV_WGI_GE.ESTtier 4
level
real_residential_property_prices
channel
bis:WS_SPPtier 2
—
effective_corporate_tax_rate
channel
oecd:OECD.CTPtier 2
—
population_total
control
world_bank_wdi:SP.POP.TOTLtier 2
—
urban_population_share
control
world_bank_wdi:SP.URB.TOTL.IN.ZStier 2
—
trade_openness_pct_gdp
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
—
human_capital_tertiary_attainment
control
world_bank_wdi:SE.TER.CUAT.BA.ZStier 2
—

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — us_eu_gdp_per_capita_divergence_policy_causes

Verdict: PARTIAL — coef=+0.1801, p=0.565 (above α=0.1); direction inconclusive

Pre-registration

  • Claim: US GDP per capita (PPP, constant $) exceeds the EU15 weighted average by approximately 50% as of 2023, with the gap widening from ~20% in 2000 after converging during 1980-1995. The divergence is primarily explained by policy-channel differences that are empirically separable from demographic, geographic, or capital-stock differences: (a) US product- market deregulation and competition-policy activism vs EU regulatory density (OECD PMR); (b) US labour-market flexibility vs EU employment protection (OECD EPL); (c) capital-market depth and venture-financing breadth; (d) energy-cost differential post-2011 driven by shale vs Energiewende/gas-import dependence; (e) tax structure favouring capital formation. The claim is that demographic + trade-openness + human-capital controls leave policy channels as the binding explanation.
  • Falsification rule: Not supported if policy channels (PMR, EPL, economic-freedom, tax, institutional quality) jointly explain less than 50% of the US-EU15 GDP-per-capita gap after demographics + trade + human-capital controls, or if including IRL and LUX in the baseline reverses the sign on core policy coefficients (indicating the divergence is FDI-distortion-driven rather than policy-driven).
  • Falsification test: policy_channel_share_of_explained_variance

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +0.1801
  • Std error: 0.3
  • p-value: 0.565
  • Observations: 30, countries: 15
  • Within R²: -1.7
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • wb:NY.GDP.PCAP.PP.KD → gdp_per_capita_ppp_constant (outcome, publisher=world_bank_wdi, n=8325)
  • wb:NY.GDP.PCAP.KD → gdp_per_capita_constant (outcome, publisher=world_bank_wdi, n=12104)
  • oecd_pmr:OECD.ECO.GCRD,DSD_PMR@DF_PMR,1.2 → product_market_regulation_aggregate (decomposition_channels, publisher=oecd_pmr, n=105)
  • oecd:OECD.ELS.EMP,DSD_EPL_OV@DF_EPL_OV,1.0 → employment_protection_legislation_overall (decomposition_channels, publisher=oecd, n=1123)
  • fraser_efw:aggregate_score → economic_freedom_index (decomposition_channels, publisher=fraser_efw, n=4557)
  • wgi:GOV_WGI_GE.EST → institutional_quality_government_effectiveness (decomposition_channels, publisher=wgi, n=5168)
  • bis:WS_SPP → real_residential_property_prices (decomposition_channels, publisher=bis, n=2272)
  • wb:SP.POP.TOTL → population_total (controls, publisher=world_bank_wdi, n=14447)
  • wb:SP.URB.TOTL.IN.ZS → urban_population_share (controls, publisher=world_bank_wdi, n=16965)
  • wb:NE.TRD.GNFS.ZS → trade_openness_pct_gdp (controls, publisher=world_bank_wdi, n=10714)
  • wb:SE.TER.CUAT.BA.ZS → human_capital_tertiary_attainment (controls, publisher=world_bank_wdi, n=1403)

Variables missing data

  • oecd:OECD.SDD.NAD.PROD,DSD_PDB@DF_PDB_LV,1.0 (outcome, name=gdp_per_hour_worked_ppp) — vintage not on disk
  • oecd:OECD.CTP,DSD_CTS@DF_CTS_CIT,1.0 (decomposition_channels, name=effective_corporate_tax_rate) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:53:07+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Candidate, not pre_registered. Promotion requires: (1) Fraser EFW fetcher (currently scrape_needed) (2) OECD Corporate Tax Statistics dataflow URN verified (3) OECD Productivity Database dataflow URN verified (4) Spec decision on whether GDP-per-hour-worked or GDP-per-capita is the canonical outcome (per-hour isolates productivity; per-capita includes participation, hours worked, and demographic effects).

Authored framework. Read the transparency note.