Economic freedom and equality: Friends or foes?
How does economic freedom, mainly how property rights are designed and protected, relate to income equality? Whilst this is argued to be theoretically ambiguous, the empirical results reveal that there is a positive relationship between changes in economic freedom and equality: the more a country increased its economic freedom between 1975 and 1985, the higher the level of equality around 1985. Most important in this regard is trade liberalization and financial deregulation. Also, there are signs that the level of economic freedom in 1985 is negatively related to the level of equality around that year, plausibly because of less redistribution.
Unable to display preview. Download preview PDF.
- Atkinson, A.B. (1983). The economics of inequality. Oxford: Clarendon Press.Google Scholar
- Barro, R.J. and SalaiMartin, X. (1992). Public finance in models of economic growth. Review of Economic Studies 59(4): 645–661.Google Scholar
- Barro, R.J. and Lee, J.W. (1993). International comparisons of educational attainment. Journal of Monetary Economics 32(3): 363–394.Google Scholar
- Davis, O.A. and Wu, W. (1996). Measuring economic freedom. Unpublished manuscript.Google Scholar
- De Vannsay, X. and Spindler, Z.A. (1994). Freedom and growth: Do constitutions matter? Public Choice 78(3–4): 359–372.Google Scholar
- Deininger, K. and Squire, L. (1996). Measuring income inequality: A new database. World Bank Economic Review 10(3): 565–591.Google Scholar
- Fölster, S. and Trofimov, G. (1996). Does equality promote growth? Working Paper No. 461, The Industrial Institute for Economic and Social Research, Stockholm.Google Scholar
- Gwartney, J.D., Lawson, R. and Block, W. (1996). Economic freedom of the world: 1975–1995. Vancouver, BC: The Fraser Institute.Google Scholar
- Heston, A. and Summers, R. (1991). The Penn world table (Mark 5): An expanded set of international comparisons, 1950–1988. Quarterly Journal of Economics 106(2): 327–368.Google Scholar
- Lindert, P.H. and Williamson, J.G. (1983). English workers' living standards during the industrial revolution: A new look. The Economic History Review 36(1): 1–25.Google Scholar
- Myhrman, J. (1994). Hur Sverige blev rikt. Stockholm: SNS Förlag.Google Scholar
- North, D.C. and Weingast, B.R. (1989). Constitutions and commitment: The evolution of institutions governing public choice in seventeenthcentury England. Journal of Economic History, 49(4): 803–832.Google Scholar
- Nozick, R. (1974). Anarchy, state, and utopia. New York: Basic Books.Google Scholar
- Perotti, R. (1996). Growth, income distribution, and democracy: What the data say. Journal of Economic Growth 1(2): 149–187.Google Scholar
- Persson, T. and Tabellini, G. (1994). Is inequality harmful for growth? American Economic Review 84(3): 600–621.Google Scholar
- Rawls, J. (1971). A theory of justice. Cambridge: The Belknap Press of Harvard University Press.Google Scholar
- Rosenberg, N. and Birdzell, L.E., Jr. (1986). How the west grew rich: The economic transformation of the industrial world. New York: Basic Books.Google Scholar
- World Bank (various years). World development report. Oxford: Oxford University Press.Google Scholar