Consumption inequality and poverty in Greece: Evidence and lessons from a decade-long crisis

The paper assesses evolutions in consumption inequality and poverty in Greece from the onset of the economic crisis in 2009 until the completion of the last structural adjustment programme in 2019, being the first to analyse distributional developments under the SYRIZA-led government as contrasted to the period that led to its electoral rise. Using microsimulation analysis on several waves of Household Budget Survey data, this study finds that the left-led government elected in 2015 reversed trends of steeply escalating inequality and poverty of the 2009–2014 period. By adopting policies with clearly Rawlsian characteristics, primarily the least well-off and partly the middle class gained some lost ground. However, distributional changes were mostly marginal, when compared to the massive adverse developments of the 2009–2014 period. At the same time, the disequalising effect of indirect taxation became stronger as further tax hikes were employed to achieve fiscal consolidation targets. Our results suggest that even well-targeted redistributive policies, unless sufficiently generous, have limited capacity to actually lift people out of poverty and multilevel policies affecting the distribution of market incomes are necessary. If the NextGenerationEU recovery plan is set to achieve inclusive growth, this an important lesson for policy makers.