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Structural change and inequality in a general equilibrium model of a transition economy

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Listed:
  • Joanna Tyrowicz
  • Krzysztof Makarski
  • Jan Lutynski

Abstract

The paper studies the role of economic transition in the evolution of wealth inequality. We build a novel overlapping generations model that features heterogeneous workers and exogenous changes: (i) a structural change shifting employment from manufacturing to services and increasing educational attainment, (ii) TFP growth along the path of macroeconomic convergence and (iii) gains in longevity. Using this model, we quantify the role of structural change in the evolution of wealth inequality in Poland as of 1990. We show that a rise in wealth inequality because of growing longevity is lower in an economy undergoing structural change. Thus, structural change per se lowers wealth inequality, at least initially. We also provide an evaluation of a policy‐relevant redistribution instrument.

Suggested Citation

  • Joanna Tyrowicz & Krzysztof Makarski & Jan Lutynski, 2025. "Structural change and inequality in a general equilibrium model of a transition economy," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 33(3), pages 667-693, July.
    • Handle: RePEc:wly:ectrin:v:33:y:2025:i:3:p:667-693
    DOI: 10.1111/ecot.12443
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    References listed on IDEAS

    as
    1. Castanheira, Micael & Roland, Gerard, 2000. "The Optimal Speed of Transition: A General Equilibrium Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 219-239, February.
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    More about this item

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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