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Cover of: The Relationship between Economic Freedom and Poverty Rates: Cross-Country Evidence
Colin Doran, Thomas Stratmann

The Relationship between Economic Freedom and Poverty Rates: Cross-Country Evidence

Section: Articles
Volume 176 (2020) / Issue 4, pp. 686-707 (22)
Published 11.09.2020
DOI 10.1628/jite-2020-0042
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Summary
We study the relationship between economic freedom and poverty rates in 151 countries over a twenty-year period. Using the World Bank's poverty headcounts of those living on less than $1.90 per day, $3.20 per day, and $5.50 per day, we find evidence that economic freedom, measured by the Heritage Foundation's Index of Economic Freedom, is associated with lower poverty rates. We also test the effect of various components of the Index of Economic Freedom.We find thata government's integrity and a country's trade freedom are associated with lower poverty rates. We check the robustness of our results using alternative freedom indices.