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Does education affect economic liberty? The role of information and the media

Papaioannou, Sotiris (2018): Does education affect economic liberty? The role of information and the media.

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Abstract

We explore whether education plays a key role in determining economic liberty. Baseline estimates suggest that the educational level of a country, as measured by the average years of total schooling, is a significant contributor to economic freedom. To isolate exogenous variation, we use historical information on primary school enrollment rates and also rely on genetic information. We show that the exogenous component of education is strongly correlated with economic liberty after controlling for the influence of a number of other relevant factors. We identify access to information and media freedom as two channels through which higher education is translated into less interventional government policy. We offer non parametric evidence and demonstrate that the impact of schooling is non linear. At low levels of education its influence is negative implying that economic policies in favor of government intervention are more likely to prevail when the educational level of a country is low. When moving to higher levels of schooling, this effect switches to positive.

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