The Relationship between Economic Freedom and Poverty Rates: Cross-Country Evidence

Colin Doran and Thomas Stratmann

Journal of Institutional and Theoretical Economics (JITE), 2020, vol. 176, issue 4, 686-707

Abstract: We study the relationship between economic freedom and poverty rates in 151 countries over a twenty-year period. Using the World Bank's poverty headcounts of those living on less than $1.90 per day, $3.20 per day, and $5.50 per day, we find evidence that economic freedom, measured by the Heritage Foundation's Index of Economic Freedom, is associated with lower poverty rates. We also test the effect of various components of the Index of Economic Freedom.We find thata government's integrity and a country's trade freedom are associated with lower poverty rates. We check the robustness of our results using alternative freedom indices.

Keywords: poverty; freedom; government; trade (search for similar items in EconPapers)
JEL-codes: I30 P16 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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DOI: 10.1628/jite-2020-0042

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