Who gains from economic freedom? A panel analysis on decile income shares

ABSTRACT

By analysing a panel of 76 developed and developing countries for period 1980–2014, this paper provides new evidence about the relation between economic freedom and income distribution, measured through decile income shares. The results show that a higher degree of economic freedom has a negative impact on the first eight deciles; conversely, it favours the richest percentiles and, especially, the top 10% and 5%. While the results aim at reopening an old debate with new evidence, the paper calls for more accurate studies that estimate the effects that each subcomponent of economic freedom may have on income inequalities.

KEYWORDS:

• Income distribution
• decile income shares
• economic freedom
• panel analysis

JEL CLASSIFICATION:

• D31
• P50
• O10

Disclosure statement

No potential conflict of interest was reported by the author.

Supplementary material

Supplemental data for this article can be accessed here

Notes

¹ More details are available in Lahoti, Jayadev, and Reddy (2016) and here: http://gcip.info/.

² See Škare and Stjepanovic (2014) for a review.

³ The results of these alternative specifications and estimation methods are available upon request.