Income Inequality, Economic Freedom, and Economic Growth in Greece: A Multivariate Analysis

Abstract

This empirical research applies the autoregressive distributed lag (ARDL) econometric technique to investigate the long- and short-run effects of economic growth and economic freedom on income inequality in Greece between 1980 and 2019. This study advances previous empirical studies by incorporating two auxiliary variables into the aforementioned nexus: population growth and tertiary educational attainment. Considering our findings, it is envisaged that Greek policymakers should consider economic freedom as an important long-term goal when contemplating policies aimed at reducing income inequality. In the short term, however, economic growth appears more effective than economic freedom in promoting income equality. Finally, the two demographic variables, population and educational attainment, emerged as critical determinants in promoting income equality.