Economic transition and the distributions of income and wealth
AbstractUsing a model of wealth distribution dynamics and occupational choice, the author investigates the distributional consequences of policies and developments associated with the transition from central planning to a market system. The model suggests that even an efficient privatization designed to be egalitarian may lead to increases in inequality (and possibly poverty), both during the transition and in the new steady state. Creating new markets in services that are also supplied by the public sector may also contribute to an increase in inequality. So can labor market reforms that lead to a decompression of the earnings structure and to greater flexibility in employment. The results underline the importance of retaining government provision of basic public goods and services, removing barriers that prevent the participation of the poor in the new private sector, and ensuring that suitable safety nets are in place.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 1808.
Date of creation: 31 Aug 1997
Date of revision:
Environmental Economics&Policies; Economic Theory&Research; Banks&Banking Reform; Fiscal&Monetary Policy; Labor Policies; Banks&Banking Reform; Health Economics&Finance; Economic Theory&Research; Inequality; Environmental Economics&Policies;
Other versions of this item:
- Francisco H. G. Ferreira, 1999. "Economic transition and the distributions of income and wealth," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 377-410, July.
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