Cash Social Transfers, Direct Taxes, and Income Distribution in Late Socialism
The author analyzes the impact of direct taxes and cash social transfers on income distribution in Bulgaria, Czechoslovakia, Hungary, Poland and Yugoslavia in the years before the collapse of communism. He contrasts the results for socialist and market economies. Cash social transfers accounted for about a fifth of gross income, a proportion comparable with that in developed welfare economies. Generally, cash transfers were unrelated to income in socialist countries, in marked contrast with market economies, where such transfers go mainly to low income households. Direct taxes played almost no role in income redistribution. They were small - 1 to 2 percent of gross income, except in Hungary - and proportional to income. Most taxes were paid by enterprises, as payroll taxes, and most workers were unaware of the taxation and that public spending could not permanently exceed public revenues from taxation. In socialist countries, social support was built into the system through full employment guarantees, state run pension schemes, and free public education and health care. The only explicit policy toward poverty involved alcoholics, handicapped people, and other special categories. This system is being replaced by a market system in which the labor market is key and those who cannot earn enough must be supported by the state. To counteract increasing income disparities, social transfers must be focussed more on the poor. Eastern European states are ill prepared for this role. They have no experience in identifying the needy and targeting support to them. The question is, toward which world of welfare capitalism are the formerly socialist countries likely to evolve? The author contends that the Central European countries will probably evolve toward the corporatist model of continental Europe. Capitalist countries in Europe tend to have large social transfers that are often related to previous earnings, so they have relatively limited roles in income distribution. Transf
(This abstract was borrowed from another version of this item.)
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Bergson, Abram, 1984. "Income Inequality under Soviet Socialism," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1052-1099, September.
- O'Higgins, Michael & Schmaus, Guenther & Stephenson, Geoffrey, 1989. "Income Distribution and Redistribution: A Microdata Analysis for Seven Countries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 35(2), pages 107-131, June.
- Morrisson, Christian, 1984. "Income distribution in East European and Western countries," Journal of Comparative Economics, Elsevier, vol. 8(2), pages 121-138, June.
- Adam, Jan & Nosal, Miloslav, 1982. "Earnings differentials and household-income differentials in Hungary--Policies and practice," Journal of Comparative Economics, Elsevier, vol. 6(2), pages 173-203, June.
- Phelps Brown, Henry, 1988. "Egalitarianism and the Generation of Inequality," OUP Catalogue, Oxford University Press, number 9780198286486.
- Okrasa, W., 1988. "Redistribution and the two dimensions of inequality : An east-west comparison," European Economic Review, Elsevier, vol. 32(2-3), pages 633-643, March.
When requesting a correction, please mention this item's handle: RePEc:eee:jcecon:v:18:y:1994:i:2:p:175-197. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.