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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dani Rodrik, 1999.
"Democracies Pay Higher Wages,"
The Quarterly Journal of Economics,
MIT Press, vol. 114(3), pages 707-738, August.
- Keane, Michael P. & Prasad, Eswar, 2002.
"Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland,"
IZA Discussion Papers
448, Institute for the Study of Labor (IZA).
- Michael P. Keane & Eswar S. Prasad, 2002. "Inequality, Transfers, And Growth: New Evidence From The Economic Transition In Poland," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 324-341, May.
- Keane, M. P. & Prasad, E. S., 2000. "Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland," Working Papers 00-09, C.V. Starr Center for Applied Economics, New York University.
- Eswar Prasad & Michael P. Keane, 2000. "Inequality, Transfers and Growth - New Evidence From the Economic Transition in Poland," IMF Working Papers 00/117, International Monetary Fund.
- Milanovic, Branko, 2007.
"Where in the world are you? Assessing the importance of circumstance and effort in a world of different mean country incomes and (almost) no migration,"
3420, University Library of Munich, Germany.
- Milanovic, Branko, 2008. "Where in the world are you ? Assessing the importance of circumstance and effort in a world of different mean country incomes and (almost) no migration," Policy Research Working Paper Series 4493, The World Bank.
- José Gabriel Palma, 2006. "Globalizing Inequality: ‘Centrifugal’ and ‘Centripetal’ Forces at Work," Working Papers 35, United Nations, Department of Economics and Social Affairs.
- 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.
- Ferreira, Francisco H. G., 1997. "Economic transition and the distributions of income and wealth," Policy Research Working Paper Series 1808, The World Bank.
- By Ales BulÌr, 2001.
"Income Inequality: Does Inflation Matter?,"
IMF Staff Papers,
Palgrave Macmillan, vol. 48(1), pages 5.
- 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.
- Hongyi Li & Lyn Squire & Heng-fu Zou, 1998.
"Explaining International and Intertemporal Variations in Income Inequality,"
CEMA Working Papers
73, China Economics and Management Academy, Central University of Finance and Economics.
- Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January.
- Mitra, Pradeep & Yemtsov, Ruslan, 2006. "Increasing inequality in transition economies : is there more to come?," Policy Research Working Paper Series 4007, The World Bank.
- Jens H�lscher, 2006. "Income Distribution and Convergence in the Transition Process – A Cross-Country Comparison," Comparative Economic Studies, Palgrave Macmillan, vol. 48(2), pages 302-325, June.
- Sukiassyan, Grigor, 2007. "Inequality and growth: What does the transition economy data say?," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 35-56, March.
- R. Rovelli & A. Zaiceva, 2011.
"Individual support for economic and political changes: Evidence from transition countries, 1991-2004,"
wp736, Dipartimento Scienze Economiche, Universita' di Bologna.
- Riccardo Rovelli & Anzelika Zaiceva, 2011. "Individual support for economic and political changes: Evidence from transition countries, 1991-2004," Center for Economic Research (RECent) 059, University of Modena and Reggio E., Dept. of Economics.
- Guriev, Sergei & Zhuravskaya, Ekaterina, 2009.
"(Un)Happiness in Transition,"
CEPR Discussion Papers
7258, C.E.P.R. Discussion Papers.
- R. Golinelli & R. Rovelli, 2011.
"Did Growth and Reforms Increase Citizens’ Support for the Transition?,"
wp771, Dipartimento Scienze Economiche, Universita' di Bologna.
- Golinelli, Roberto & Rovelli, Riccardo, 2013. "Did growth and reforms increase citizens' support for the transition?," European Journal of Political Economy, Elsevier, vol. 30(C), pages 112-137.
- Golinelli, Roberto & Rovelli, Riccardo, 2011. "Did Growth and Reforms Increase Citizens' Support for the Transition?," IZA Discussion Papers 5836, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.