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Kyklos

Does Economic Freedom Boost Growth for Everyone?

Scientific Article in English
Reference
Bergh, Andreas and Christian Bjørnskov (2021). “Does Economic Freedom Boost Growth for Everyone?”. Kyklos 74(2), 170–186. doi.org/10.1111/kykl.12262

Authors
Andreas Bergh, Christian Bjørnskov

While the association between economic freedom and long‐term economic growth has been 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 toward reconciling these two bodies of literature by exploring the within‐quintile growth consequences of changes in three separate elements of economic freedom: the size of government, institutional quality and and policy quality. Although the distributional consequences of increases in economic freedom are theoretically ambiguous, we find evidence that economic freedom affects all parts of the income distribution equally, in addition to indications that the growth effects are largest for the poorest and richest quintiles.