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The Relationship Between Economic Freedom and Income Inequality: A Panel Data Analysis

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dc.contributor.advisor Kontorovich, Vladimir Rutledge, Ioannis 2019-04-07T01:13:23Z 2019-04-07T01:13:23Z 2018
dc.description.abstract Previous research has been divided on the relationship between economic freedom and income inequality. This paper adds on to the existing debate by examining the relationship between each constituent of economic freedom and income inequality (both pre- and post-tax) via Panel OLS Fixed Effects regressions. Split sample analyses test for differential outcomes based on continent and GDP level. This paper uses data from SWIID (2016), the Fraser Institute (2015), the Heritage Foundation (2017) and the World Bank (2016) that cover a set of 186 countries across five continents over the 1970-2015 period. I find that low inflation decreases income inequality, but a smaller government, an impartial court system, international trade freedom and regulatory efficiency all increase income inequality. The Economic Freedom Index is positively correlated with income inequality, and suggestive evidence is provided against the inverted-U hypothesis. The effects vary by continent, and after a certain GDP level, small governments increase income inequality.
dc.description.sponsorship Haverford College. Department of Economics
dc.language.iso eng
dc.title The Relationship Between Economic Freedom and Income Inequality: A Panel Data Analysis
dc.type Thesis
dc.rights.access Open Access

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