Reform and Inequality during the Transition: An Analysis Using Panel Household Survey Data, 1990-2005
AbstractUsing for the first time household survey data from 26 post-Communist countries, covering the period 1990-2005, this paper examines correlates of unprecedented increases in inequality registered by most of the economies. The analysis shows, after controlling for country fixed effects and type of survey used, that economic reform is strongly negatively associated with the income share of the bottom decile, and positively with the income shares of the top two deciles. However, breaking economic reform into its component parts, the picture is more nuanced. Large-scale privatization and infrastructure reform (mostly consisting of privatization and higher fees) are responsible for the pro-inequality effect; small-scale privatization tends to raise the income shares of the bottom deciles. Acceleration in growth is also pro-rich. But democratization is strongly pro-poor, as is lower inflation. Somewhat surprisingly, the analysis finds no evidence that greater government spending as share of gross domestic income reduces inequality.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4780.
Length: 35 pages
Date of creation: 01 Nov 2008
Date of revision:
Inequality; transition; economic policy;
Other versions of this item:
- 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.
- Milanovic, Branko & Ersado, Lire, 2010. "Reform and Inequality during the Transition: An Analysis Using Panel Houshold Survey Data, 1990-2006," Working Paper Series wp2010-62, World Institute for Development Economic Research (UNU-WIDER).
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-14 (All new papers)
- NEP-DEV-2009-02-14 (Development)
- NEP-TRA-2009-02-14 (Transition Economics)
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