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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