Economic freedom, economic development and income inequality in Asia: an analysis from the Kuznets curve perspective

Abstract

The impact of economic freedom on income inequality has been inconclusive in the literature. Previous studies also show the importance of economic freedom in boosting economic development, whereas the Kuznets curve theory indicates the inverted U-shaped relationship between economic development and income inequality. Thus, economic development may play an important role in moderating the nexus of economic freedom and income inequality. This study throws light on the effects of economic freedom, economic development, and their interaction on income inequality in 35 Asian economies during 2000–2018 from the Kuznets curve’s perspective. Our empirical results demonstrate that initially economic freedom increases income inequality, then until a threshold of economic development, economic freedom reduces income inequality. In addition, the inverted U-shaped Kuznets curve of economic development and income inequality is confirmed in the context of the Asian continent. The robustness of our results is ensured with different proxies of economic freedom and various estimators.

Keywords:

• Asian countries
• economic freedom
• income inequality
• economic development

JEL CLASSIFICATION::

• F14
• O15
• O47
• O53

Data availability statement

The data that support the findings of this study are available from the corresponding author, upon reasonable request.

Disclosure statement

The authors declare that they have no conflict of interest.

Funding

None.

Notes

1 Results of VIF and 1/VIF tests are not reported here to save spaces, but they are available upon request.

Additional information

Notes on contributors

Cong Minh Huynh

Dr. Cong Minh Huynh is a senior lecturer and reseacher at Becamex Business School (BBS), Eastern International University (EIU), Binh Duong province, Vietnam. He is also department head of business administration at BBS, and the head of CEBFA Lab at EIU. His research interests are development economics, international economics economics, and environmental economics. His research papers have been published in Empirical Economics, Applied Economics Letters, Journal of the Asia Pacific Economy, Environmental Economics and Policy Studies, International Economics and Economic Policy, The Journal of International Trade & Economic Development, Annals of Public and Cooperative Economics Environmental Science and Pollution Research, Economic Change and Restructuring, Journal of Sustainable Finance & Investment, Journal of Asian and African Studies… He also plays the role of a reviewer for Applied Economics, Journal of the Asia Pacific economy, Economic Systems, Environmental Economics and Policy Studies, The Journal of International Trade & Economic Development, Journal of Asian and African Studies, Asia-Pacific Journal of Regional Science, Environment Development and Sustainability, Cogent Economics and Finance…