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Economic Freedom and Income Inequality: Evidence from a Panel of Global Economies— A Linear and a Non‐Linear Long‐Run AnalysisThis study employs panel data from 138 countries (with unbalanced time frameworks) to investigate the relationship between economic freedom and income inequality. Both linear and non‐linear cointegration methodologies are used to identify a long‐run equilibrium relationship between: (i) the overall Economic Freedom of the World index and income inequality, and (ii) the major areas of the index and income inequality. The linear long‐run parameter estimates document that the association turns out to be negative, while the non‐linear long‐run parameter estimates illustrate that above a threshold point the association between economic freedom and income inequality is negative, while below this threshold point, the association turns out to be positive. The empirical findings survive a number of robustness tests, such as alternative measures of income inequality.
The impact of economic freedom on the gender pay gap: evidence from a survey of UK householdsPurpose-Using survey datasets, this work explores the impact of economic freedom on the gender pay gap. Design/methodology/approach-The analysis combines Economic Freedom of the World data with the Understanding Society (USoc) Microdata series to determine the association between economic freedom, and its respective components, and the gap in pay between males and females in the U.K. Findings-The results document that economic freedom positively affects the gender pay gap. When the components of the index are considered, the findings indicate different effects of various types of policy, i.e. less government spending, stronger trade liberalization conditions and levels of corruption lead to higher gaps; stronger legal and property rights and a sounder money system have no impact on the gap. Moreover, a stronger impact in the manufacturing industry, part-time workers and those who work in the non-London regions is observed. The results survived certain robustness tests. Practical implications-The findings imply that reductions to government spending programmes can potentially aggravate the gap in hourly wages paid between males and females and should, therefore, be implemented. It may be also possible to provide females the training or education necessary to effectively compete in the workforce, before eliminating any spending programme they rely on.
Live free or bribe: On the causal dynamics between economic freedom and corruption in U.S. statesWe investigate the relationship between economic freedom and corruption using data from U.S. states covering almost a quarter of a century. Our study advances the existing literature on several fronts. First, instead of using subjective cross-country corruption indices assembled by various investment risk services, we use a more objective measure of corruption: the number of government officials convicted in a state for crimes related to corruption. Second, unlike previous studies, we exploit both time series and cross-sectional variation in the data in the estimation of a panel error correction model. The panel error correction model results show that in the long-run economic freedom, per capita income, and education have a negative and statistically significant impact on corruption whereas income inequality has a positive and statistically significant impact. The causality tests associated with the panel error correction model reveal bidirectional causality between economic freedom and corruption in both the short-run and long-run.