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Which economic freedoms influence per capita real income?

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  • Richard J. Cebula

Abstract

Several recent empirical studies find a strong, positive impact of economic freedom on economic growth. This finding is predicated upon the argument that increased economic freedom elevates the pace of economic activity through incentives and other means and hence generates higher economic growth. This study focuses on a similar, but not identical, potential impact of higher economic freedom levels. In particular, this study investigates the hypothesis that higher levels of economic freedom promote higher levels of economic activity and hence higher levels of per capita real income. The context of this empirical study is the 30 nations of the OECD over the study period 2003 to 2006. Panel Least Squares (PLS) estimations reveal that the level of per capita real income is an increasing function of business freedom, freedom from corruption, investment freedom, monetary freedom, government size freedom, trade freedom and property rights freedom, whereas fiscal freedom, labour freedom and financial freedom do not appear to influence per capita real income.

Suggested Citation

  • Richard J. Cebula, 2013. "Which economic freedoms influence per capita real income?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(4), pages 368-372, March.
    • Handle: RePEc:taf:apeclt:v:20:y:2013:i:4:p:368-372
    DOI: 10.1080/13504851.2012.707768
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    Cited by:

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    2. Irina Georgescu & Jani Kinnunen, 2019. "Well-Being and Economic Freedoms in OECD," Book chapters-LUMEN Proceedings, in: Camelia Ignatescu (ed.), 12th LUMEN International Scientific Conference Rethinking Social Action. Core Values in Practice | RSACVP 2019 | 15-17 May 2019 | Iasi – Romania, edition 1, volume 9, chapter 11, pages 108-125, Editura Lumen.
    3. Olalekan Charles Okunlola & Anthony E. Akinlo, 2021. "Does economic freedom enhance quality of life in Africa?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(3), pages 357-387, September.
    4. Johan Graafland & Bart Compen, 2015. "Economic Freedom and Life Satisfaction: Mediation by Income per Capita and Generalized Trust," Journal of Happiness Studies, Springer, vol. 16(3), pages 789-810, June.
    5. Andrzej Kacprzyk, 2016. "Economic freedom–growth nexus in European Union countries," Applied Economics Letters, Taylor & Francis Journals, vol. 23(7), pages 494-497, May.
    6. Johan, Sofia & Sakariyahu, Rilwan & Lawal, Rodiat & Paterson, Audrey & Ajide, Folorunsho M., 2023. "Does energy poverty moderate the impact of economic freedom on the quality of life in Africa? A panel quantile via moment approach," Finance Research Letters, Elsevier, vol. 58(PC).
    7. Ivana Brkić & Nikola Gradojević & Svetlana Ignjatijević, 2020. "The Impact of Economic Freedom on Economic Growth? New European Dynamic Panel Evidence," JRFM, MDPI, vol. 13(2), pages 1-13, February.
    8. Olalekan C. Okunlola & Olumide A. Ayetigbo & Sam O. Ajiye, 2022. "Does a free market system reduce conflict in Africa?," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 147-170, June.
    9. Khatiwada, Lila K., 2014. "Modeling and Explaining County-level Prosperity in the U.S," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 44(2).
    10. Olalekan C. Okunlola & Olumide A. Ayetigbo, 2022. "Economic Freedom and Human Development in ECOWAS: Does Political-Institutional Strength Play a Role?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 1751-1785, September.

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