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An Empirical Note on Economic Freedom and Income Inequality

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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.

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Authors and Affiliations

  1. Department of Economics, College of the Holy Cross, Worcester, MA, 01610, USA

    John R. Carter

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  1. John R. Carter
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Correspondence to John R. Carter.

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Able assistance was provided by Elisa Gjoka (College of the Holy Cross, ’06) and funded by the May and Stanley Smith Charitable Trust Summer Research Assistant Program. I am also indebted to Charles Anderton, Robert Baumann, Miles Cahill, and an anonymous referee for their helpful comments.

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Carter, J.R. An Empirical Note on Economic Freedom and Income Inequality. Public Choice 130, 163–177 (2007). https://doi.org/10.1007/s11127-006-9078-0

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  • DOI: https://doi.org/10.1007/s11127-006-9078-0

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