Economic freedom and people at risk of poverty in selected Eurozone countries

This paper investigates whether higher economic freedom and/or lower government intervention in the economy contribute to poverty reduction. Connecting the percentage of people at risk of poverty with the economic freedom index elaborated by the Fraser Institute, and focusing on 12 Eurozone countries in the period between 2000 and 2019, it appears that both higher economic freedom and a lower level of government intervention in the economy (mostly lower spending in government consumption, investment and transfers and subsidies) are associated with an increase in poverty, which stands in contrast to the predictions of neoliberal economic theory. • I study the effect of Economic Freedom (EF) and the Size of Government (SG) on poverty • The econometric analysis considers 12 European countries from 2000-2019. • Higher EF contributes to increasing the percentage of people at risk of poverty. • A Lower level of SG is associated with a lower percentage of people at risk of poverty.