Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1276: Does Economic Freedom Boost Growth for Everyone?

Andreas Bergh () and Christian Bjørnskov ()
Additional contact information
Andreas Bergh: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Christian Bjørnskov: Aarhus University, Postal: and Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

Abstract: While the association between economic freedom and long-run economic growth is well documented, the parallel research literature on the distributional consequences of economic freedom is full of conflicting findings. In this paper, we take a step towards reconciling the two literatures by exploring the within-quintile growth consequences of changes in three different types of economic freedom: the size of government, institutional quality and policy quality. While the associations are theoretically ambiguous, we find evidence that economic freedom affects all parts of the income distribution equally, and some indications that the growth effects are largest for the poorest and richest quintiles.

Keywords: Economic freedom; Liberalization; Economic growth; Income inequality

JEL-codes: O40; O43; P16

30 pages, May 2, 2019

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