Economic Freedom promotes upward income mobility
In this chapter of Economic Freedom of the World, we provide a direct assessment of the effect of economic freedom on income mobility rather than using
income inequality as a proxy of the latter. In the next section, we highlight the
possible links between economic freedom and upward social mobility and argue
that (on net), there is a strong case for arguing that economic freedom increases
mobility. In section 3, we explain the empirical approach and data used to test
our claim that economic freedom promotes upward social mobility. In section 4,
we present our results that show that the index of economic freedom on income
mobility has a strong positive effect on upward mobility. The five subcategories
of the EFW index taken individually tell a more nuanced story.3 Area 1: Size of
Government is inversely related to mobility (that is, bigger government means
more income mobility) while the other four subcategories are positively related
to mobility (that is, more economic freedom in these subcategories means more
mobility). In section 5, we conclude.
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Publish date: 31 August 2021
The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.