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Economic Freedom and Equality: Friends or Foes?

31 Pages Posted: 23 Oct 2009  

Niclas Berggren

Research Institute of Industrial Economics (IFN)

Date Written: October 20, 2009

Abstract

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.

Keywords: Economic freedom, equality, economic growth

JEL Classification: B52, D30, O43

Suggested Citation

Berggren, Niclas, Economic Freedom and Equality: Friends or Foes? (October 20, 2009). Public Choice, Vol. 100, No. 3-4, 1999. Available at SSRN: https://ssrn.com/abstract=1491582

Niclas Berggren (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

HOME PAGE: http://www.ifn.se/nb

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