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Measurement and decomposition of Lithuania’s income inequality

Author

Listed:
  • Nerijus Cerniauskas

    (Bank of Lithuania & Vilnius University)

  • Andrius Ciginas

    (Bank of Lithuania & Vilnius University)

Abstract

Despite Lithuania’s household income inequality being among the highest in the European Union (EU), little empirical work has been carried out to explain such disparities. In this article, we use the EU Statistics on Income and Living Conditions sample micro data. We confirm that income inequality in Lithuania is high compared to the EU average and find that it is robust to inequality measure or equivalence scale used. We have also decomposed household disposable income inequality by subgroups and factors. We find that the number of employed household members in Lithuania’s households affects income inequality more as compared to the EU. It is related to a larger labour income, and self-employment income in particular, contribution to inequality in Lithuania as opposed to the EU. Moreover, transfers and taxes have a smaller impact on reducing inequality in Lithuania than in the EU.

Suggested Citation

  • Nerijus Cerniauskas & Andrius Ciginas, 2019. "Measurement and decomposition of Lithuania’s income inequality," Bank of Lithuania Discussion Paper Series 14, Bank of Lithuania.
    • Handle: RePEc:lie:dpaper:14
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Income inequality; factor decomposition; subgroup decomposition; Lithuania; European Union;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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