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An Empirical Note on Economic Freedom and Income Inequality

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  • John Carter

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Abstract

I report estimates for a fixed-effects model of country-level Gini coefficients as a function of economic freedom along with relevant control variables. Gini coefficients are drawn from the UNU/WIDER World Income Inequality Database Version 2.0a, while economic freedom is measured by the Fraser Institute's Economic Freedom of the World index. Controls are included for per capita income, political structure, education, demographics, and industrial composition. Over a broad range of freedom, the estimated relation between economic freedom and income inequality is positive, statistically significant, but relatively inelastic. Copyright Springer Science + Business Media B.V. 2007

Suggested Citation

  • John Carter, 2007. "An Empirical Note on Economic Freedom and Income Inequality," Public Choice, Springer, vol. 130(1), pages 163-177, January.
  • Handle: RePEc:kap:pubcho:v:130:y:2007:i:1:p:163-177
    DOI: 10.1007/s11127-006-9078-0
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    References listed on IDEAS

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    1. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
    2. de Haan, Jakob & Sturm, Jan-Egbert, 2000. "On the relationship between economic freedom and economic growth," European Journal of Political Economy, Elsevier, vol. 16(2), pages 215-241, June.
    3. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    4. Berggren, Niclas, 1999. "Economic Freedom and Equality: Friends or Foes?," Public Choice, Springer, vol. 100(3-4), pages 203-223, September.
    5. Cameron,A. Colin & Trivedi,Pravin K., 2008. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9787111235767, January.
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    7. World Bank, 2005. "World Development Indicators 2005," World Bank Publications, The World Bank, number 12426, November.
    8. Mathias Thoenig & Thierry Verdier, 2003. "A Theory of Defensive Skill-Biased Innovation and Globalization," American Economic Review, American Economic Association, vol. 93(3), pages 709-728, June.
    9. repec:wbk:wbpubs:12425 is not listed on IDEAS
    10. Andrea Brandolini & Anthony B. Atkinson, 2001. "Promise and Pitfalls in the Use of "Secondary" Data-Sets: Income Inequality in OECD Countries As a Case Study," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 771-799, September.
    11. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
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    Citations

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    Cited by:

    1. Joshua C. Hall & Robert A. Lawson, 2014. "Economic Freedom Of The World: An Accounting Of The Literature," Contemporary Economic Policy, Western Economic Association International, vol. 32(1), pages 1-19, January.
    2. Jan-Egbert Sturm & Jakob De Haan, 2015. "Income Inequality, Capitalism, and Ethno-linguistic Fractionalization," American Economic Review, American Economic Association, vol. 105(5), pages 593-597, May.
    3. repec:spr:jhappi:v:18:y:2017:i:4:d:10.1007_s10902-016-9770-9 is not listed on IDEAS
    4. Kristina Nyström, 2008. "The institutions of economic freedom and entrepreneurship: evidence from panel data," Public Choice, Springer, vol. 136(3), pages 269-282, September.
    5. Jamie Bologna & Joshua C. Hall, 2014. "Economic Freedom Research: Some Comments and Suggestions," Working Papers 14-23, Department of Economics, West Virginia University.
    6. Bergh, Andreas & Nilsson, Therese, 2010. "Do liberalization and globalization increase income inequality?," European Journal of Political Economy, Elsevier, vol. 26(4), pages 488-505, December.
    7. Ahmad, Mahyudin, 2016. "Middle income trap and income inequality: Empirical evidence on the distributional effect of economic liberalization and political regime," MPRA Paper 76437, University Library of Munich, Germany.
    8. Gary A. Hoover & Ryan A. Compton & Daniel C. Giedeman, 2015. "The Impact of Economic Freedom on the Black/White Income Gap," American Economic Review, American Economic Association, vol. 105(5), pages 587-592, May.
    9. Joshua Hall, 2013. "Joseph Shaanan: Economic freedom and the American dream," Public Choice, Springer, vol. 155(3), pages 565-567, June.

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