Does Economic Freedom Foster Tolerance?

31 Pages Posted: 13 Apr 2013

See all articles by Niclas Berggren

Niclas Berggren

Research Institute of Industrial Economics (IFN); University of Economics, Prague - Faculty of Economics and Public Administration

Therese Nilsson

Research Institute of Industrial Economics (IFN); Lund University - Department of Economics

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Date Written: May 2013

Abstract

Tolerance has the potential to affect both economic growth and wellbeing. It is therefore important to discern its determinants. We contribute to the literature by investigating whether the degree to which economic institutions and policies are market‐oriented is related to different measures of tolerance. Cross‐sectional and first‐difference regression analysis of up to 69 countries reveals that economic freedom is positively related to tolerance towards homosexuals, especially in the longer run, while tolerance towards people of a different race and a willingness to teach kids tolerance are not strongly affected by how free markets are. Stable monetary policy and outcomes is the area of economic freedom most consistently associated with greater tolerance, but the quality of the legal system seems to matter as well. Through instrumental variables and first‐difference results we find indications of a causal relationship.

Suggested Citation

Berggren, Niclas and Nilsson, Therese, Does Economic Freedom Foster Tolerance? (May 2013). Kyklos, Vol. 66, Issue 2, pp. 177-207, 2013, Available at SSRN: https://ssrn.com/abstract=2250245 or http://dx.doi.org/10.1111/kykl.12017

Niclas Berggren (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

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University of Economics, Prague - Faculty of Economics and Public Administration ( email )

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Therese Nilsson

Research Institute of Industrial Economics (IFN) ( email )

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Stockholm, SE-102 15
Sweden

Lund University - Department of Economics ( email )

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