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Inequality in Transition Countries: The Contributions of Markets and Government Taxes and Transfers

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  • Michele Giammatteo

Abstract

This paper examines inequality patterns in the 1990s in Poland, Russia and Hungary. We consider three different definitions of income and analyse the contributions to inequality of their main components using LIS micro data. Inequality is measured using the Gini and Theil indices, which in turn are decomposed by source using two alternative approaches (the Shorrocks¿ axiomatic approach and the Theil-based decomposition). The role of transfers and taxes in mitigating total inequality during the transition period is highlighted, as are the contributions of market factors.

Suggested Citation

  • Michele Giammatteo, 2006. "Inequality in Transition Countries: The Contributions of Markets and Government Taxes and Transfers," LIS Working papers 443, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:443
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    References listed on IDEAS

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    1. Branko Milanovic, 1999. "Explaining the increase in inequality during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 299-341, July.
    2. Garner, Thesia I & Terrell, Katherine, 1998. "A Gini Decomposition Analysis of Inequality in the Czech and Slovak Republics during the Transition," CEPR Discussion Papers 1897, C.E.P.R. Discussion Papers.
    3. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
    4. Christopher Heady & Theodore Mitrakos & Panos Tsakloglou, 2001. "The distributional impact of social transfers in the European Union: evidence from the ECHP," Fiscal Studies, Institute for Fiscal Studies, vol. 22(4), pages 547-565., December.
    5. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
    6. Philippe Aghion & Simon Commander, 1999. "On the dynamics of inequality in the transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 275-298, July.
    7. Joseph Deutsch & Jacques Silber, 2004. "Measuring the Impact of Various Income Sources on the Link between Inequality and Development: Implications for the Kuznets Curve," Review of Development Economics, Wiley Blackwell, vol. 8(1), pages 110-127, February.
    8. repec:dau:papers:123456789/10091 is not listed on IDEAS
    9. Michael F rster & Timothy Smeeding & David Jesuit, 2002. "Regional Poverty and Income Inequality in Central and Eastern Europe: Evidence from the Luxembourg Income Study," LIS Working papers 324, LIS Cross-National Data Center in Luxembourg.
    10. Jesper Drescher, 1999. "Income Inequality Decomposition by Income Source and by Population Subgroups: A Theoretical Overview and the Empirical Case of Denmark," LIS Working papers 209, LIS Cross-National Data Center in Luxembourg.
    11. Newell, Andrew T. & Socha, Mieczyslaw, 2005. "The Distribution of Wages in Poland, 1992-2002," IZA Discussion Papers 1485, Institute of Labor Economics (IZA).
    12. Thesia I. Garner & Katherine Terrell, 1998. "A Gini decomposition analysis of inequality in the Czech and Slovak Republics during the transition1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(1), pages 23-46, May.
    13. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
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    Cited by:

    1. Vesselin Mintchev & Venelin Boshnakov & Alexander Naydenov, 2010. "Sources of Income Inequality: Empirical Evidence from Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 39-64.
    2. Milanovic, Branko & Ersado, Lire, 2008. "Reform and inequality during the transition: An analysis using panel household survey data, 1990-2005," MPRA Paper 7459, University Library of Munich, Germany.
    3. Milanovic, Branko & Ersado, Lire, 2008. "Reform and inequality during the transition: An analysis using panel household survey data, 1990-2005," MPRA Paper 7459, University Library of Munich, Germany.
    4. Elizabeth Brainerd, 2010. "Human Development in Eastern Europe and the CIS Since 1990," Human Development Research Papers (2009 to present) HDRP-2010-16, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    5. 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.
    6. David Aristei & Cristiano Perugini, 2014. "Speed and Sequencing of Transition Reforms and Income Inequality: A Panel Data Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 542-570, September.
    7. Nauro F. Campos & Paul De Grauwe & Yuemei Ji, 2017. "Structural Reforms, Growth and Inequality: An Overview of Theory, Measurement and Evidence," CESifo Working Paper Series 6812, CESifo.
    8. Aristei, David & Perugini, Cristiano, 2012. "Inequality and reforms in transition countries," Economic Systems, Elsevier, vol. 36(1), pages 2-10.

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