Economic freedom, the ability of individuals to make their own economic decisions, is key to economic and social progress. Hundreds of academic studies have shown that economic freedom leads to higher rates of economic growth, higher levels of income, increased trust and honesty in government, protection of civil liberties, reductions in poverty, and improvements in health and educational outcomes1. Unfortunately, in many countries not all members of society have equal access to economic institutions that protect economic freedom. For example, formal legal restrictions in many countries prevent women from owning property, engaging in voluntary trade, and operating businesses.
In 2016, the Fraser Institute published an important study in its annual Economic Freedom of the World report, Gender Disparity in Legal Rights and Its Effects on Economic Freedom (Fike, 2016). The study included the construction of the Gender Disparity Index, which used several measures to capture gender disparities in legal rights around the world in five broad areas: Freedom of Movement, Property Rights, Financial Rights, Freedom to Work and Legal Status. Economic Freedom of the World: 2017 Annual Report uses a slightly revised Gender Disparity Index to adjust its economic freedom index to account for the differential legal treatment of women. This paper explores how the Gender Disparity Index affects the economic freedom ratings of countries around the world and examines whether societies with greater levels of economic freedom (adjusted for gender legal disparities) have superior economic and social outcomes for women.
The Gender Disparity Index (GDI) captures the degree to which women around the world have the same legal rights as men and adjusts the economic freedom score accordingly. The Gender Disparity Index employs the World Bank’s Women, Business, and the Law Report (World Bank, 2009, 2011, 2013, 2015), which tracks legal and regulatory barriers imposed on women that limit their ability to participate freely in formal economic activity. These data were released for the first time in 2009, and are updated every two years to incorporate legal and regulatory reforms that take place. For 2015, the most recent year shown in the Gender Disparity Index, the index uses 41 variables from Women, Business, and the Law Report. All of the variables included directly relate to a woman’s ability to freely participate in the formal economy and can be broadly classified under the following categories.