Economic freedom and income inequality: Does political regime matter?

Artikel

There is a growing literature studying the effects of economic freedom and democracy on income inequality; nevertheless, the inequality-effects of both factors are apparently studied separately. This paper revisits the income inequality-economic freedom nexus and uncovers the role of political regime in explaining the relationship. Using the latest inequality data from Standardized World Income Inequality (SWIID) version 5.0 for a sample of countries up to 115 over 1970-2014 period, and via dynamic panel GMM estimation method, an inequality model that explicitly captures the interaction effect of economic freedom and democracy is estimated. The findings demonstrate that economic freedom has positive effect on income inequality. The estimated size of inequality-increasing effects of economic freedom is substantial, ranging between 0.3% and 0.5% per annum. Nevertheless, the findings show that the freedom-induced inequality is attenuated in the presence of a democratic regime in the countries under study. Furthermore, freedom of international trade and market deregulation are shown to be the two most consistently significant liberalization policies across the baseline estimations and various sensitivity tests. The paper is concluded with some policy implications.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Journal: Economies ; ISSN: 2227-7099 ; Volume: 5 ; Year: 2017 ; Issue: 2 ; Pages: 1-28 ; Basel: MDPI

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Economic Development: Human Resources; Human Development; Income Distribution; Migration ; Other Economic Systems: Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
• Thema: liberalization ; economic freedom ; democracy ; income inequality ; panel data

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Ahmad, Mahyudin
• Ereignis: Veröffentlichung
• (wer): MDPI
• (wo): Basel
• (wann): 2017

Weitere Informationen

• DOI: doi:10.3390/economies5020018
• Handle: http://hdl.handle.net/10419/197021
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ