Economic freedom, income inequality and life satisfaction in OECD countries
Graafland,Johan Lous,Bjorn
Graafland,Johan
Lous,Bjorn
Abstract
Since Piketty’s Capital in the 21st Century in 2014, scientific interest into the impact of income inequality on society has been on the rise. However, little is known about the mediating role of income inequality in the relationship between market institutions and subjective well-being. Using panel analysis on a sample of 21 OECD countries to test the effects of five different types of economic freedom on income inequality, we find that fiscal freedom, free trade and freedom from government regulation increase income inequality, whereas sound money decreases income inequality. Income inequality is found to have a negative effect on life satisfaction. Mediation tests show that income inequality mediates the influence of fiscal freedom, free trade and freedom from government regulation on life satisfaction.
Description
Date
2018-10
Journal Title
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Volume Title
Publisher
Research Projects
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Keywords
Economic freedom, income inequality, life satisfaction, mediation, regulation, tax freedom, trade freedom, A13 - Relation of Economics to Social Values, D60 - General, E02 - Institutions and the Macroeconomy, O57 - Comparative Studies of Countries, P14 - Property Rights, P16 - Capitalist Institutions ; Welfare State, P51 - Comparative Analysis of Economic Systems, SDG 1 - No Poverty, SDG 10 - Reduced Inequalities, SDG 16 - Peace, Justice and Strong Institutions
Citation
Graafland, J & Lous, B 2018, 'Economic freedom, income inequality and life satisfaction in OECD countries', Journal of Happiness Studies, vol. 19, no. 7, pp. 2071-2093. https://doi.org/10.1007/s10902-017-9905-7