Growth, Inequality and Economic Freedom: Evidence from the US States

30 Pages Posted: 2 Nov 2015  

Christian Bjørnskov

Aarhus University - Department of Economics and Business; Research Institute of Industrial Economics (IFN); Center for Political Studies

Date Written: November 1, 2015

Abstract

This paper returns to the discussion of how income inequality affects economic growth. The main argument is that economic freedom is likely to affect the association although the relations are theoretically ambiguous. In a panel of 300 observations from five-year periods across the 50 US states, I employ five different measures of inequality. The results show that across measures, the growth effects of inequality turn more positive with more economic freedom. The moderating effects are mainly driven by measures of public sector consumption.

Keywords: Inequality, economic freedom, growth

JEL Classification: O11, O38, O43, P48

Suggested Citation

Bjørnskov, Christian, Growth, Inequality and Economic Freedom: Evidence from the US States (November 1, 2015). Available at SSRN: https://ssrn.com/abstract=2684730 or http://dx.doi.org/10.2139/ssrn.2684730

Christian Bjørnskov (Contact Author)

Aarhus University - Department of Economics and Business ( email )

Fuglesangs Allé 4
Aarhus V, DK-8210
Denmark

Research Institute of Industrial Economics (IFN) ( email )

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

Center for Political Studies

Landgreven 3
Copenhagen K, DK-1301
Denmark

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