On the ambiguous economic freedom–inequality relationship

Daniel L. Bennett () and Boris Nikolaev
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Daniel L. Bennett: Patrick Henry College

Empirical Economics, 2017, vol. 53, issue 2, No 14, 717-754

Abstract: 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 (search for similar items in EconPapers)
JEL-codes: C82 D30 D63 P16 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (41)

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DOI: 10.1007/s00181-016-1131-3

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