Empirical Economics

, Volume 53, Issue 2, pp 717–754 | Cite as

On the ambiguous economic freedom–inequality relationship

Article

Abstract

Previous research on the relationship between economic freedom and income inequality has produced mixed results. We provide a short survey of this literature, identifying potential causes for this empirical heterogeneity. Next, we replicate the results from two significant studies using six alternative measures of income inequality for an updated dataset of up to 112 countries over the period 1970–2010. Notably, we use the latest release of the Standardized World Income Inequality Dataset, which allows us to account for the uncertainty of the estimated Gini coefficients. We find that the results of previous studies are sensitive to the choice of country sample, time period and/or inequality measure used. We conclude with suggestions for future research in the area.

Keywords

Capitalism Economic freedom Income inequality Institutions 

JEL Classification

C82 D30 D63 P16 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.Patrick Henry CollegePurcellvilleUSA
  2. 2.Oxford College of Emory UniversityOxfordUSA

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