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Inequality, Transfers and Growth; New Evidence From the Economic Transition in Poland

Listed author(s):
  • Eswar S Prasad
  • Michael P. Keane

This paper challenges the conventional wisdom that inequality in Poland increased markedly during the economic transition. Income and consumption inequality actually declined in 1990-92 and rose only moderately above pre-transition levels by 1997. However, inequality in labor earnings increased markedly and consistently during 1990-97. Social transfer mechanisms, including pensions, helped mitigate increases in overall inequality and poverty. More importantly, these transfer mechanisms were well-designed to reduce political resistance to market-oriented reforms in the early years of transition, paving the way for rapid growth. Cross-country evidence from transition economies is consistent with this interpretation and with recent literature suggesting that inequality-reducing redistribution can enhance growth.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 00/117.

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Length: 52
Date of creation: 01 Jun 2000
Handle: RePEc:imf:imfwpa:00/117
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  1. Hartmut Lehmann & Jonathan Wadsworth, 2000. "Tenures that shook the world: Worker Turnover in Russia, Poland and Britain," LICOS Discussion Papers 9500, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  2. Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
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  7. Keane, Michael & Prasad, Eswar, 1998. "Consumption and Income Inequality in Poland During the Economic Transition," Working Papers 98-38, C.V. Starr Center for Applied Economics, New York University.
  8. Svejnar, Jan, 1996. "Enterprises and Workers in the Transition: Econometric Evidence," American Economic Review, American Economic Association, vol. 86(2), pages 123-127, May.
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  11. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
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  13. Banerjee, Abhijit V & Duflo, Esther, 2003. "Inequality and Growth: What Can the Data Say?," Journal of Economic Growth, Springer, vol. 8(3), pages 267-299, September.
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  24. repec:dau:papers:123456789/10091 is not listed on IDEAS
  25. Brunon Gorecki, 1994. "Evidence of a New Shape of Income Distribution in Poland," Eastern European Economics, M.E. Sharpe, Inc., vol. 32(3), pages 32-51, June.
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  27. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
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