An Empirical Note on Economic Freedom and Income Inequality
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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.
KeywordsEconomic freedom Income inequality Gini coefficient Equality Tradeoff Country panel
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