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Does economic freedom boost growth for everyone?

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  • Andreas Bergh
  • Christian Bjørnskov

Abstract

While the association between economic freedom and long‐term economic growth has been well documented, the parallel research literature on the distributional consequences of economic freedom is full of conflicting findings. In this paper, we take a step toward reconciling these two bodies of literature by exploring the within‐quintile growth consequences of changes in three separate elements of economic freedom: the size of government, institutional quality and and policy quality. Although the distributional consequences of increases in economic freedom are theoretically ambiguous, we find evidence that economic freedom affects all parts of the income distribution equally, in addition to indications that the growth effects are largest for the poorest and richest quintiles.

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  • Andreas Bergh & Christian Bjørnskov, 2021. "Does economic freedom boost growth for everyone?," Kyklos, Wiley Blackwell, vol. 74(2), pages 170-186, May.
    • Handle: RePEc:bla:kyklos:v:74:y:2021:i:2:p:170-186
    DOI: 10.1111/kykl.12262
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    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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