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Influence of the degree of economic freedom on labor productivity in Latin America

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  • Juan Celestino León Mendoza

    (Universidad Nacional del Callao)

Abstract

Introduction: Latin American countries exhibit considerable heterogeneity in terms of labor productivity levels and the degree of economic freedom. Objective: To analyze the influence of economic freedom on labor productivity in Latin American countries. Methodology: Panel data from 20 countries covering the period 2014 - 2023 were used, applying clustered ordinary least squares, fixed and random effects models. Results: Economic freedom has a positive effect on labor productivity. The countries with the highest levels of productivity are those with the highest degree of economic freedom. Key indicators include property rights, control of corruption, public spending, fiscal health, entrepreneurial freedom and monetary independence. Discussion: A greater degree of economic freedom fosters labor productivity, although the relationship varies between countries. The interaction with other factors such as educational quality and infrastructure also influences the results. Although economic freedom is key, other complementary elements must be considered for a more significant impact. Conclusions: Economic freedom is crucial to increase labor productivity. Economic policies should focus on creating a favorable environment for investment and innovation.

Suggested Citation

  • Juan Celestino León Mendoza, 2026. "Influence of the degree of economic freedom on labor productivity in Latin America," Revista Tendencias, Universidad de Narino, vol. 27(01), pages 122-147, January.
    • Handle: RePEc:col:000520:022232
    DOI: https://doi.org/10.22267/rtend.2627
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    References listed on IDEAS

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    1. Noha Emara & Loreto Reyes Rebolledo, 2019. "On the Relationship between Economic Freedom and Output per Worker: The Case of Asia-pacific Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 9(6), pages 184-194.
    2. Horst Feldmann, 2025. "Economic freedom and the quality of education," Kyklos, Wiley Blackwell, vol. 78(1), pages 86-110, February.
    3. Tetiana Kornieieva & Miguel Varela & Ana Lúcia Luís & Natália Teixeira, 2022. "Assessment of Labour Productivity and the Factors of Its Increase in European Union 27 and Ukrainian Economies," Economies, MDPI, vol. 10(11), pages 1-25, November.
    4. Andrés Rodríguez-Pose & Roberto Ganau, 2022. "Institutions and the productivity challenge for European regions," Journal of Economic Geography, Oxford University Press, vol. 22(1), pages 1-25.
    5. Atangana Ondoa Henri & Seabrook Arthur Mveng, 2024. "Economic Freedom and Productivity in Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 3039-3058, March.
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    JEL classification:

    • B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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