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Factors Influencing Income Inequality In Transition Economies

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  • Anneli Kaasa

Abstract

A sharp rise of income inequality in the transition countries has caused a wide-ranging discussion about the factors affecting inequality. The present paper investigates a number of factors that influence income inequality in the transition countries. The main contribution of the study lies in its different approach to analysing these factors. While previous studies have either mainly focussed on single factors of inequality or have used regression analysis involving but a few factors, the author of the present paper uses principal component analysis in order to analyse as many different indicators as possible and at the same time avoid the problem of possible multicollinearity. As a result, four components are formed from the initial indicators. The impact of these components on income inequality and the component scores are then analysed.

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Paper provided by Faculty of Economics and Business Administration, University of Tartu (Estonia) in its series University of Tartu - Faculty of Economics and Business Administration Working Paper Series with number 18.

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Length: pages
Date of creation: 2003
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Handle: RePEc:mtk:febawb:18

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  1. Matthew Higgins & Jeffrey G. Williamson, 1999. "Explaining inequality the world round: cohort size, Kuznets curves, and openness," Staff Reports 79, Federal Reserve Bank of New York.
  2. Koen Caminada & Kees Goudswaard, 2001. "International Trends in Income Inequality and Social Policy," International Tax and Public Finance, Springer, vol. 8(4), pages 395-415, August.
  3. Snower, Dennis J., 1999. "Causes of Changing Earnings Inequality," IZA Discussion Papers 29, Institute for the Study of Labor (IZA).
  4. Eicher, Theo S. & Garcia-Penalosa, Cecilia, 2001. "Inequality and growth: the dual role of human capital in development," Journal of Development Economics, Elsevier, vol. 66(1), pages 173-197, October.
  5. J Benson Durham, 1999. "Econometrics of Income Distribution: Toward More Comprehensive Specification of Institutional Correlates," Comparative Economic Studies, Palgrave Macmillan, vol. 41(1), pages 43-74, April.
  6. Cornia, Giovanni Andrea & Kiiski, Sampsa, 2001. "Trends in Income Distribution in the Post-World War II Period Evidence and Interpretation," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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Cited by:
  1. Penka Kovacheva, 2011. "Human capital and wage inequality during transition: evidence from Bulgaria," Post-Communist Economies, Taylor & Francis Journals, vol. 23(2), pages 237-255.
  2. Majid Sameti & Leila Rafie, 2010. "Interaction of Income Distribution, Taxes and Economic Growth (The Case of Iran and Some Selected East Asian Countries)," Iranian Economic Review, Economics faculty of Tehran university, vol. 15(1), pages 67-81, winter.

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