Economic Freedom & Inequality: A Systematic Review of the Evidence

This study reviews econometric evidence from 19 published articles reporting 308 estimates on the relationship between income inequality, measured by the Gini coefficient, and economic freedom, measured by the Economic Freedom of the World (EFW) index and its components. The literature suggests that stronger property rights and rule of law are associated with greater equality, while sound money, freer trade, and lighter regulation show weak correlations with inequality. Government size appears unrelated. Overall, greater economic freedom tends to correspond with modestly higher inequality: a 1.25-point increase in EFW is associated with about a 1.2-point increase in the Gini coefficient.