IDEAS home Printed from https://ideas.repec.org/a/beo/journl/v61y2016i210p23-46.html
   My bibliography  Save this article

Why Income Inequality Is So High In Serbia: Empirical Evidence And A Measurement Of The Key Factors

Author

Listed:
  • Gorana Krstić

Abstract

We analyse the extent and evolution of income inequality in Serbia and examine factors that may have contributed to the high and rising inequality. Specifically, using data from the 2013 Survey of Income and Living Conditions, we focus on two issues: the effect of the quantity and quality of household members’ employment on the earnings of low-wage workers, and the role of taxes and social transfers in redistributing income from the betteroff to the poor. The results suggest that income inequality, measured by the Gini coefficient, has significantly increased in Serbia over the period of economic crisis, reaching 38.7 in 2013. The examined causes of such a high inequality are the high rate of low work intensity of household members and the high proportion of people working in non-standard forms of employment (i.e., part-time, temporary, and self-employment arrangements), mostly in the informal sector. In addition, the low coverage of social transfers, particularly monetary social assistance and child benefits, and the very low level of progressivity of the Serbian personal tax system explain the relatively modest – by international standards – redistributive role of direct taxes and social transfers.

Suggested Citation

  • Gorana Krstić, 2016. "Why Income Inequality Is So High In Serbia: Empirical Evidence And A Measurement Of The Key Factors," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 61(210), pages 23-46, July - Se.
    • Handle: RePEc:beo:journl:v:61:y:2016:i:210:p:23-46
    as

    Download full text from publisher

    File URL: http://www.ekof.bg.ac.rs/wp-content/uploads/2016/10/430-1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mitra, Pradeep & Yemtsov, Ruslan, 2006. "Increasing inequality in transition economies : is there more to come?," Policy Research Working Paper Series 4007, The World Bank.
    2. Isabell Koske & Jean-Marc Fournier & Isabelle Wanner, 2012. "Less Income Inequality and More Growth – Are They Compatible? Part 2. The Distribution of Labour Income," OECD Economics Department Working Papers 925, OECD Publishing.
    3. Engellandt, Axel & Riphahn, Regina T., 2005. "Temporary contracts and employee effort," Labour Economics, Elsevier, vol. 12(3), pages 281-299, June.
    4. Sebastian Leitner & Mario Holzner, 2008. "Economic Inequality in Central, East and Southeast Europe," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 5(1), pages 155-188.
    5. Márton Medgyesi, 2014. "Components of income inequality and its change in EU countries, 2004-2010," ImPRovE Working Papers 14/01, Herman Deleeck Centre for Social Policy, University of Antwerp.
    6. Amuedo-Dorantes, Catalina & Serrano-Padial, Ricardo, 2007. "Wage Growth Implications of Fixed-Term Employment: An Analysis by Contract Duration and Job Mobility," Labour Economics, Elsevier, vol. 14(5), pages 829-847, October.
    7. Clemens Fuest & Judith Niehues & Andreas Peichl, 2010. "The Redistributive Effects of Tax Benefit Systems in the Enlarged EU," Public Finance Review, , vol. 38(4), pages 473-500, July.
    8. Michael Förster & Peter Whiteford, 2009. "How much Redistribution do Welfare States Achieve? The Role of Cash Transfers and Household Taxes," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(03), pages 34-41, October.
    9. Niels-Hugo Blunch, 2015. "Bound to lose, bound to win? The financial crisis and the informal-formal sector earnings gap in Serbia," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-34, December.
    10. Gorana Krstić & Peter Sanfey, 2011. "Earnings inequality and the informal economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(1), pages 179-199, January.
    11. Michael Förster & Peter Whiteford, 2009. "How much Redistribution do Welfare States Achieve? The Role of Cash Transfers and Household Taxes," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(3), pages 34-41, October.
    12. Krstic, Gorana & Litchfield, Julie & Reilly, Barry, 2007. "An anatomy of male labour market earnings inequality in Serbia, 1996-2003," Economic Systems, Elsevier, vol. 31(1), pages 97-114, March.
    13. repec:ces:ifodic:v:7:y:2009:i:3:p:14567070 is not listed on IDEAS
    14. Johannes Koettl & Michael Weber, 2012. "Chapter 5 Does Formal Work Pay? The Role of Labor Taxation and Social Benefit Design in the New EU Member States," Research in Labor Economics, in: Informal Employment in Emerging and Transition Economies, pages 167-204, Emerald Group Publishing Limited.
    15. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages 214-244, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jelena Žarković Rakić & Gorana Krstić & Nermin Oruč & Will Bartlett, 2019. "Income Inequality In Transition Economies: A Comparative Analysis Of Croatia, Serbia And Slovenia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(223), pages 39-60, October –.
    2. Milica Uvalić & Božidar Cerović† & Jasna Atanasijević, 2020. "The Serbian Economy Ten Years After The Global Economic Crisis," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(225), pages 33-72, April – J.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garcia-Louzao, Jose & Hospido, Laura & Ruggieri, Alessandro, 2023. "Dual returns to experience," Labour Economics, Elsevier, vol. 80(C).
    2. Judith Niehues, 2010. "Social Spending Generosity and Income Inequality: A Dynamic Panel Approach," SOEPpapers on Multidisciplinary Panel Data Research 336, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Carlos Farinha Rodrigues & Isabel Andrade, 2014. "Robin Hood versus Piggy Bank: Income Redistribution in Portugal 2006-2010," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(5), pages 617-630, October.
    4. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    5. Carlos Farinha Rodrigues & Isabel Andrade, 2013. "Robin Hood versus Piggy Bank: Income redistribution in Portugal 2006-10," Working Papers Department of Economics 2013/28, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    6. Takuya Hasebe, 2011. "The Type of Contract and Starting Wage and Wage Growth: The Evidence from New Graduates from Post-Secondary Schools in the Netherlands," Working Papers 20, AlmaLaurea Inter-University Consortium.
    7. Juan J. Dolado & Salvador Ortigueira & Rodolfo Stucchi, 2016. "Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(4), pages 421-459, November.
    8. Martin D Munk & Till Nikolka & Panu Poutvaara, 2022. "International family migration and the dual-earner model [On the origin of gender roles: women and the plough]," Journal of Economic Geography, Oxford University Press, vol. 22(2), pages 263-287.
    9. Marco Di Cintio & Emanuele Grassi, 2015. "Wage Incentive Profiles in Dual Labour Markets," Economica, London School of Economics and Political Science, vol. 82(328), pages 790-812, October.
    10. Anna Lukiyanova, 2013. "Earnings inequality and informal Employment in Russia," HSE Working papers WP BRP 37/EC/2013, National Research University Higher School of Economics.
    11. Marta Silva & Luis Filipe Martins & Helena Lopes, 2015. "Asymmetric labour market reforms and wage growth with fixed-term contracts: does learning about match quality matter?," Working Papers Series 2 15-04, ISCTE-IUL, Business Research Unit (BRU-IUL).
    12. Nicola Brandt, 2012. "Reducing Poverty in Chile: Cash Transfers and Better Jobs," OECD Economics Department Working Papers 951, OECD Publishing.
    13. Ursula Dallinger, 2015. "Public redistribution and voter demand – The middle class as a modern Robin Hood?," LIS Working papers 630, LIS Cross-National Data Center in Luxembourg.
    14. Jelena Žarković Rakić & Gorana Krstić & Nermin Oruč & Will Bartlett, 2019. "Income Inequality In Transition Economies: A Comparative Analysis Of Croatia, Serbia And Slovenia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(223), pages 39-60, October –.
    15. Nora Lustig, 2016. "Fiscal Policy, Inequality and the Poor in the Developing World," Working Papers 1612, Tulane University, Department of Economics, revised Aug 2017.
    16. J Ignacio García-Pérez & Ioana Marinescu & Judit Vall Castello, 2019. "Can Fixed-term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain," The Economic Journal, Royal Economic Society, vol. 129(620), pages 1693-1730.
    17. Tai Lee, 2022. "The Impact of Employment Protection on the Probability of Job Separation: Evidence from Job Duration Data in South Korea," Journal of Labor Research, Springer, vol. 43(3), pages 369-414, December.
    18. Daniela Campos Ugaz, 2022. "Time precarity at work: nonstandard forms of employment and everyday life," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(2), pages 969-991, November.
    19. Koen Caminada & Chen Wang, 2011. "Disentangling Income Inequality and the Redistributive Effect of Social Transfers and Taxes in 36 LIS Countries," LIS Working papers 567, LIS Cross-National Data Center in Luxembourg.
    20. Michele Battisti & Giovanna Vallanti, 2013. "Flexible Wage Contracts, Temporary Jobs, and Firm Performance: Evidence From Italian Firms," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(3), pages 737-764, July.

    More about this item

    Keywords

    inequality; employment; redistribution; social transfers; taxes; Serbia;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:beo:journl:v:61:y:2016:i:210:p:23-46. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Goran Petrić (email available below). General contact details of provider: https://edirc.repec.org/data/efbeoyu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.