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Earnings Disparities and Income Inequality in CEE Countries: An Analysis of Development and Relationships

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  • Jirí Vecerník

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Abstract

The potential in survey data for the study of simultaneous changes in earnings disparities, inequality of household income, and the connections between them has thus far been underexploited. This paper presents various data on four Central and East European (CEE) countries and, for the sake of comparison, partially on Austria and Germany. First, I compare the changes in both distributions over time since the communist period as reported in various sources and ask: how much did disparities and inequalities increase during the transition? Second, I present some methodological and empirical attempts that have been made so far to analyse the connections between the two distributions and ask: how should the association between personal and household earnings be analysed and what do we know about its development? Third, I present the changing links between earned and disposable income in CEE countries using LIS data for history and EU-SILC data for the present time. Here the question is: how strong was and currently is the association in CEE countries and how do they differ in packaging family income? Two perspectives are used: employed persons (examining the association between their earnings and the income of the households they live in) and employee households (examining the sources of their income by decomposing their inequality). Various sources confirm that earnings disparities and income inequalities rose more or less in all four CEE countries after 1989. This is apparent in the individual countries in various phases of their transition. In contrast, no increase occurred from 2004 to 2007, according to the EU-SILC surveys.

Suggested Citation

  • Jirí Vecerník, 2010. "Earnings Disparities and Income Inequality in CEE Countries: An Analysis of Development and Relationships," LIS Working papers 540, LIS Cross-National Data Center in Luxembourg.
  • Handle: RePEc:lis:liswps:540
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    References listed on IDEAS

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    1. 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.
    2. Thesia Garner & Katherine Terrell, 2001. "Some Explanations for Changes in the Distribution of Household Income in Slovakia: 1988 and 1996," William Davidson Institute Working Papers Series 377, William Davidson Institute at the University of Michigan.
    3. Thesia I. Garner & Katherine Terrell, 1998. "A Gini decomposition analysis of inequality in the Czech and Slovak Republics during the transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(1), pages 23-46, May.
    4. Redmond, Gerry & Kattuman, Paul, 2001. "Employment Polarisation and Inequality in the UK and Hungary," Cambridge Journal of Economics, Oxford University Press, vol. 25(4), pages 467-480, July.
    5. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521438827, April.
    6. Kattuman, Paul & Redmond, Gerry, 1997. "Income Inequality in Hungary, 1987-1993," Cambridge Working Papers in Economics 9726, Faculty of Economics, University of Cambridge.
    7. Brück, Tilman & Peters, Heiko, 2009. "20 years of German unification: Evidence on income convergence and heterogeneity," Working Papers 03/2009, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    8. Anthony B. Atkinson, 2000. "The Changing Distribution of Income: Evidence and Explanations," German Economic Review, Verein für Socialpolitik, vol. 1(1), pages 3-18, February.
    9. Milanovic, Branko & Ersado, Lire, 2008. "Reform and Inequality during the Transition: An Analysis Using Panel Household Survey Data, 1990-2005," Policy Research Working Paper Series 4780, The World Bank.
    10. Zaidi, Salman, 2009. "Main Drivers of Income Inequality in Central European and Baltic Countries: Some Insights from Recent Household Survey Data," Policy Research Working Paper Series 4815, The World Bank.
    11. Gudrun Biffl, 2007. "Development of the Distribution of Household Income in Austria," WIFO Working Papers 293, WIFO.
    12. Atkinson, A B, 2008. "The Changing Distribution of Earnings in OECD Countries," OUP Catalogue, Oxford University Press, number 9780199532438.
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    More about this item

    Keywords

    earnings disparities; income inequality; CEE countries;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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